U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 000-23709
DOUBLECLICK INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-3870996
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
41 MADISON AVENUE, 32ND FLOOR
NEW YORK, NEW YORK 10010
(Address of Principal Executive Officer and Zip Code)
(212) 683-0001
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes /X/ No / /
As of April 30, 1999, there were 39,580,068 shares of the registrant's
common stock outstanding.
<PAGE>
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION
ITEM 2: Consolidated Financial Information:
Consolidated Balance Sheet as of March 31, 1999 and
December 31, 1998 (unaudited with respect to March 31, 1999)........3
Unaudited Consolidated Statement of Operations for the three
months ended March 31, 1999 and 1998................................4
Unaudited Consolidated Statement of Cash Flows for the three months
ended March 31, 1999 and 1998.......................................5
Unaudited Consolidated Statement Of Stockholders' Equity for the
three months ended March 31, 1999 and 1998..........................6
Notes to Unaudited Consolidated Financial Statements................7
ITEM 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................13
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings...................... ...........................28
ITEM 2: Changes in Securities and Use of Proceeds..........................28
ITEM 3: Defaults Upon Senior Securities....................................28
ITEM 4: Submission of Matters to a Vote of Security Holders................28
ITEM 5: Other Information...................... ...........................28
ITEM 6: Exhibits and Reports on Form 8-K...................................28
ITEM 7: Signatures ........................................................29
<PAGE>
<TABLE>
DOUBLECLICK INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share amounts)
March 31, December 31,
1999 1998
---- ----
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................................................... $ 331,851 $ 127,171
Short-term investments ......................................................... 39,295 9,643
Accounts receivable, less allowances of $4,297 and $3,929 ...................... 23,085 31,342
Prepaid expenses and other current assets ...................................... 2,199 869
-------- ---------
Total current assets ...................................................... 396,430 169,025
Property and equipment, net .................................................... 14,296 13,741
Investments and other assets ................................................... 5,925 855
--------- ---------
Total assets .............................................................. $ 416,651 $ 183,621
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable ............................................................... $ 9,059 $ 20,583
Accrued expenses ............................................................... 11,130 12,220
Deferred revenues .............................................................. 3,729 1,683
Deferred license and service fees .............................................. 421 421
--------- --------
Total current liabilities ................................................. 24,339 34,907
Convertible subordinated notes ................................................. 250,000 -
Other liabilities .............................................................. 321 375
Stockholders' equity:
Common stock, par value $0.001;
39,465,228 and 39,135,774 shares outstanding .............................. 39 39
Additional paid-in capital ..................................................... 204,205 203,417
Accumulated deficit ............................................................ (61,642) (54,717)
Deferred compensation .......................................................... (345) (441)
Other accumulated comprehensive income (loss) .................................. (266) 41
---------- ---------
Total stockholders' equity ................................................ 141,991 148,339
---------- ---------
Total liabilities and stockholders' equity ................................ $ 416,651 $ 183,621
========== =========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
DOUBLECLICK INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
Three Months Ended March 31,
--------------------------------
1999 1998
---------- ---------
<S> <C> <C>
Revenues ....................................................................... $ 22,087 $ 13,004
Cost of revenues .............................................................. 10,098 8,845
-------- ---------
Gross profit ............................................................... 11,989 4,159
-------- ---------
Operating expenses
Sales and marketing ........................................................ 11,057 5,624
General and administrative ................................................. 4,265 2,349
Product development ........................................................ 3,611 1,025
Facility relocation & other ................................................ 1,644 -
-------- --------
Total operating expenses ................................................. 20,577 8,998
-------- --------
Loss from operations .......................................................... (8,588) (4,839)
Interest income ............................................................... (2,005) (428)
Interest expense .............................................................. 342 16
--------- --------
Net loss ...................................................................... $ (6,925) $ (4,427)
========= ========
Basic and diluted net loss per share ........................................... $ (0.18) $ (0.21)
Weighted average shares used in basic and diluted net
loss per share calculation .................................................... 39,301 21,166
======== ========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
DOUBLECLICK INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Three Months Ended March 31,
---------------------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................................... $ (6,925) $ (4,427)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization ............................................. 1,015 205
Facility relocation and other ........................................... 1,363 -
Amortization of deferred compensation ....... ............................ 96 204
Provision for bad debt and advertisers discounts ......................... 368 86
Changes in operating assets and liabilities:
Accounts receivable .................................................... 7,889 (5,133)
Prepaid expenses and other current assets .............................. (1,168) (125)
Accounts payable ....................................................... (11,524) 1,667
Accrued expenses ....................................................... (1,078) 2,215
Deferred revenues ...................................................... 1,941 1,156
--------- --------
Net cash used in operating activities (8,023) (4,152)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases, sales and maturities of short-term investments, net ............... (29,652) 3,536
Purchases of property and equipment ........................................ (2,862) (2,731)
--------- --------
Net cash (used in) provided by investing activities ................. (32,514) 805
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Convertible Subordinated Notes,
net of deferred offering costs of $5,253 ............................... 244,747 -
Proceeds from issuance of common stock ..................................... - 62,506
Proceeds from exercise of stock options ..................................... 936 11
Other ...................................................................... (159) 228
--------- --------
Net cash provided by financing activities ........................... 245,524 62,745
Effect of cumulative translation adjustment ................................... (307) (22)
Net increase in cash and cash equivalents ..................................... 204,680 59,376
Cash and cash equivalents at beginning of period .............................. 127,171 2,672
----------- ---------
Cash and cash equivalents at end of period .................................... $ 331,851 $ 62,048
=========== =========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
DOUBLECLICK INC.
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands)
Three Months Ended March 31,
-------------------------------
1999 1998
<S> <C> <C>
BALANCE AT BEGINNING OF PERIOD ................................................ $ 148,339 $ 9,400
Net loss ...................................................................... (6,925) (4,427)
Other comprehensive income (loss) ............................................. (307) (22)
--------- ---------
Comprehensive income (loss) ................................................... (7,232) (4,449)
Amortization of deferred compensation ......................................... 96 204
Proceeds from exercise of stock options........................................ 936 11
Proceeds from issuance of common stock ........................................ - 62,506
Other ......................................................................... (148) (5)
---------- ---------
BALANCE AT END OF PERIOD ...................................................... $ 141,991 $ 67,667
========== =========
The accompanying notes are an integral part of these consolidated financial statements
</TABLE>
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
DoubleClick Inc., together with its subsidiaries, ("DoubleClick") is a
leading provider of comprehensive Internet advertising solutions for advertisers
and Web publishers. DoubleClick's DART technology and media expertise enable it
to dynamically deliver highly targeted, measurable and cost-effective Internet
advertising for advertisers, increase ad sales and improve ad space inventory
management for Web publishers. DoubleClick was organized as a Delaware
corporation on January 23, 1996 and commenced operations on that date.
Inherent in DoubleClick's business are various risks and uncertainties,
including its limited operating history, recent development of the Internet
advertising market and unproven acceptance and effectiveness of Web advertising,
unproven business model, risks associated with technological change, and the
limited history of commerce on the Internet. DoubleClick's success may depend in
part upon the emergence of the Internet as a communications medium, prospective
product development efforts, and the acceptance of DoubleClick's solutions by
the marketplace.
BASIS OF PRESENTATION
The consolidated financial statements included herein include the accounts
of DoubleClick Inc., and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated. Investments in less
than 20% owned business partners, for which DoubleClick does not have the
ability to exercise significant influence and there is not a readily
determinable market value, are accounted for using the cost method of
accounting. Dividends and other distributions of earnings from investees, if
any, are included in income when declared.
The consolidated balance sheet as of March 31, 1999, the consolidated
statement of operations for the three months ended March 31, 1999 and 1998, and
the consolidated statement of cash flows for the three months ended March 31,
1999 and 1998 have been prepared by DoubleClick and are not audited. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at March 31, 1999 and for all periods presented have
been made. The consolidated balance sheet at December 31, 1998 has been derived
from the audited financial statements at that date.
Certain reclassifications have been made to prior period financial
statements to conform to the current period presentation.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations.
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of DoubleClick
and the notes thereto included in DoubleClick's Annual Report on Form 10-K for
the year ended December 31, 1998, filed with the Securities and Exchange
Commission on March 4, 1999, as amended on April 27, 1999. The results of
operations for the three months ended March 31, 1999 are not necessarily
indicative of the results to be expected for any subsequent quarter or the
entire year ending December 31, 1999.
In December 1996, DoubleClick entered into a Procurement and Trafficking
Agreement with Digital Equipment Corp. (subsequently acquired by Compaq Computer
Corp. ("Compaq")) to be the exclusive third-party provider of advertising
services on specified pages within the AltaVista Web site. Effective January 1,
1999, DoubleClick changed its relationship with Compaq by entering into an
Advertising Services Agreement (the "AltaVista Advertising Services Agreement")
that superceded the Procurement and Trafficking Agreement. Under the AltaVista
Advertising Services Agreement, the manner in which DoubleClick reports its
financial results related to the services it provides to the AltaVista Web site
has changed. Through December 31, 1998, DoubleClick recognized as revenues the
gross revenues related to ads delivered by DoubleClick to the AltaVista Web
site. Beginning January 1, 1999, pursuant to the AltaVista Advertising Services
Agreement, DoubleClick recognizes DART service fees, sales commissions and
billing and collection fees as revenues derived from the sale and delivery of
ads on the AltaVista Website and associated services.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
CASH AND CASH EQUIVALENTS
DoubleClick considers all short-term investments with a remaining
contractual maturity at date of purchase of three months or less to be cash
equivalents.
SHORT-TERM INVESTMENTS
DoubleClick classifies its short-term investments as available-for-sale.
Accordingly, these investments are carried at fair value. At March 31, 1999 and
December 31, 1998, the fair value of such securities approximated cost and the
unrealized holding gains or losses were not material.
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenues are derived primarily from the sale and delivery of advertising
impressions through third-party Web sites comprising DoubleClick Network (the
"Network") and fees earned from independent publishers and advertisers who use
the DART technology to deliver ad impressions. Revenues are recognized in the
period the advertising impressions are delivered provided collection of the
resulting receivable is probable.
DoubleClick becomes obligated to make payments to third-party Web sites,
which have contracted with DoubleClick to be part of the Network, in the period
the advertising impressions are delivered. Such expenses are classified as cost
of revenues in the consolidated statement of operations.
Deferred license and service fees represent payments received in advance
from third parties or affiliated companies for use of DoubleClick's trademarks,
access to DoubleClick's proprietary technology, and certain personnel during
fixed periods of time which range from two to four years. Such fees will be
recognized as revenues ratably over the terms of the applicable agreements.
DoubleClick is obligated to provide any enhancements or upgrades it develops and
other support over the term of the applicable agreements.
PRODUCT DEVELOPMENT COSTS
Product development costs and enhancements to existing products are charged
to operations as incurred. Software development costs are required to be
capitalized when a product's technological feasibility has been established by
completion of a working model of the product and ending when a product is
available for general release to customers. To date, completion of a working
model of DoubleClick's products and general release have substantially
coincided. As a result, DoubleClick has not capitalized any software development
costs since such costs have not been significant.
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
DoubleClick's financial instruments consist of cash and cash equivalents,
short-term investments, accounts receivable, accounts payable, and accrued
expenses. At March 31, 1999 and December 31, 1998, the fair value of these
instruments approximated their financial statement carrying amount.
Credit is extended to customers based on an evaluation of their financial
condition, and collateral is not required. DoubleClick performs ongoing credit
evaluations of its customers and maintains an allowance for doubtful accounts.
DoubleClick is subject to concentrations of credit risk and interest rate
risk related to its short-term investments. DoubleClick's credit risk is managed
by investing in money market funds, short term commercial paper, and A1 rated
corporate bonds with an average days to maturity of 64 days at March 31, 1999.
Net revenues derived from advertising impressions delivered to users of the
AltaVista Web site represented 21.1% and 50.9% of DoubleClick's total revenues
for the three months ended March 31, 1999 and 1998, respectively. No other Web
site on the Network was responsible for 10% or more of DoubleClick's total
revenues during the periods presented in the consolidated statement of
operations. Likewise, for the year ended December 31, 1998 and for the three
months ended March 31, 1999, no advertising customer was responsible for 10% or
more of DoubleClick's total revenue or total accounts receivable.
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
DoubleClick uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and to operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in results of
operations in the period that includes the enactment date.
BASIC AND DILUTED NET LOSS PER SHARE
The presentation of basic and diluted net loss per share has been
calculated to give effect to the conversion of the Convertible Preferred Stock
from the date of conversion, which occurred simultaneous with the closing of
DoubleClick's initial public offering on February 25, 1998. Basic net loss per
share is computed by dividing the net loss by the sum of the weighted average
number of shares of common stock outstanding, including the number of common
shares issued upon the conversion of Convertible Preferred Stock, as of the date
of conversion.
Diluted earnings per share is based on the potential dilution that would
occur on exercise or conversion of securities into common stock. Outstanding
options to purchase shares of common stock that could potentially dilute basic
earnings per share in the future were not included in the computation of diluted
net loss per share because to do so would have had an antidilutive effect for
the period presented. As a result, the basic and diluted per share amounts are
equal for the three months periods ended March 31, 1999 and 1998.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999. DoubleClick does not expect that the adoption of
SFAS No. 133 will have a material impact on its consolidated financial
statements because DoubleClick does not currently hold any derivative
instruments.
NOTE 2--PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful life of the assets. Leasehold
improvements are amortized over their estimated useful lives, or the term of the
leases, whichever is shorter.
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
ESTIMATED MARCH 31, DECEMBER 31,
(000's) USEFUL LIFE 1999 1998
- ------- ----------- ---- ----
<S> <C> <C> <C>
Computer Equipment and Software........................................ 1-3 years $14,787 $12,453
Furniture and Fixtures................................................. 5 years 1,294 1,247
Leasehold Improvements................................................. 1-5 years 2,432 2,013
Capital Work-In-Progress 808 696
------- -------
19,321 16,409
Less accumulated depreciation and amortization......................... (5,025) (2,668)
------- --------
$14,296 $13,741
======= ========
</TABLE>
As a result of DoubleClick's planned relocation, DoubleClick incurred a
non-recurring charge for the write-down of fixed assets (primarily leasehold
improvements and furniture and fixtures) that will not be relocated to
DoubleClick's new headquarters building (see Note 3). This charge is included as
Facility relocation and other in the Consolidated Statements Of Operations.
NOTE 3 - LEASE AGREEMENT
DoubleClick entered into a lease agreement dated January 26, 1999 for over
150,000 square feet of office space located at 450 West 33rd Street, New York,
New York, for a term of eleven years with an option to renew the initial term
for an additional five years. This facility will be used to consolidate
DoubleClick's present executive offices and principal operations located in New
York. In 1999, DoubleClick will make lease payments of approximately $800,000 on
this space. In addition, DoubleClick will pay monthly payments totaling $4.6
million per annum for the period from January 26, 2000 to January 25, 2004
escalating to $4.85 million for the period from January 26, 2004 to January 25,
2005 and $5.0 million per annum for the period from January 26, 2006 to the
expiration date of the initial term on January 25, 2010.
NOTE 4--CONVERTIBLE SUBORDINATED NOTES
On March 17, 1999, DoubleClick issued 4 3/4% Convertible Subordinated Notes
due 2006 with a principal amount of $250 million (the "Convertible Notes"). The
Convertible Notes are convertible into DoubleClick's common stock at a
conversion price of $165.00 per share, subject to adjustment in certain events
and at the holders' option. Interest on the Convertible Notes is payable
semiannually in arrears on March 15 and September 15 of each year, commencing on
September 15, 1999. The Convertible Notes are unsecured and are subordinated to
all existing and future Senior Indebtedness (as defined in Convertible Notes
indenture) of DoubleClick. If certain events occur (as described in the
Convertible Notes indenture), the Convertible Notes may be redeemed at the
option of DoubleClick, in whole or in part, beginning on March 20, 2001 at the
redemption prices set forth in the Convertible Notes indenture. DoubleClick is
obligated to file by May 21, 1999, a shelf registration statement covering
resales of the Convertible Notes and the common stock issuable upon conversion
of the Convertible Notes.
Upon occurrence of a Designated Event (as defined in the Convertible Notes
indenture) prior to the maturity of the Convertible Notes, each holder of the
Convertible Notes has the right to require DoubleClick to redeem all or any part
of the holder's Convertible Notes at a price equal to 100% of the principal
amount, plus any accrued interest, of the Convertible Notes being redeemed.
<PAGE>
DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
DoubleClick has or may use the net proceeds from the offering of the
Convertible Notes for general corporate purposes, including working capital to
fund anticipated operating losses, the expansion of DoubleClick's product
offerings, investments in new business products, technologies and markets,
capital expenditures, acquisitions or investments in complementary businesses,
products and technologies.
NOTE 5--STOCK SPLIT
On March 11, 1999, DoubleClick's Board of Directors approved a two-for-one
Common Stock split in the form of a stock dividend for common stockholders of
record as of March 22, 1999 payable on April 2, 1999. All references to the
number of common shares and per share amounts in the financial statements and
notes thereto for all periods presented have been retroactively adjusted to
reflect the two-for-one split.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
DOUBLECLICK CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS AND
THE FUTURE PERFORMANCE OF DOUBLECLICK WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. STOCKHOLDERS ARE CAUTIONED THAT SUCH STATEMENTS INVOLVE
RISKS AND UNCERTAINTIES. DOUBLECLICK'S ACTUAL RESULTS AND TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE
SET FORTH UNDER "RISK FACTORS THAT MAY AFFECT FUTURE RESULTS" AND ELSEWHERE IN
THIS REPORT AND IN DOUBLECLICK'S OTHER PUBLIC FILINGS MADE FROM TIME TO TIME
WITH THE SECURITIES AND EXCHANGE COMMISSION.
OVERVIEW
References in this report to "DoubleClick", "we", "our" and "us" refer to
DoubleClick Inc., and it's subsidiaries. DoubleClick is a leading provider of
comprehensive Internet advertising solutions for advertisers and Web publishers
worldwide. DoubleClick currently has two principal service offerings.
DoubleClick Network (ad sales) provides fully-outsourced ad sales, delivery and
related services to publishers of highly-trafficked Web sites, including The
Dilbert Zone, Macromedia, Travelocity, Kelly Blue Book and U.S. News Online.
DoubleClick Network focuses on meeting the needs of Internet advertisers who
target users on a national, international and/or local basis. DoubleClick's DART
Service (ad serving), consisting of DART for Web publishers and the recently
introduced Closed Loop Marketing Solutions suite of products for advertisers and
ad agencies, provides Web publishers, advertisers and ad agencies with the
ability to control the targeting, delivery, measurement and analysis of their
online marketing campaigns on a real-time basis. DoubleClick Network and DART
Service lines of business are available to Web publishers and advertisers in
international markets. DoubleClick's proprietary DART technology, which
dynamically matches and delivers ads to the target audience within milliseconds,
is the platform for all of DoubleClick's solutions.
DoubleClick completed its initial public offering in February 1998 and
received net proceeds of approximately $62.5 million. In December 1998,
DoubleClick received net proceeds of approximately $93.7 million from an
additional public offering. In March 1999, DoubleClick received net proceeds of
approximately $244.7 million from its issuance of $250 million principal amount
4 3/4% Convertible Subordinated Notes due in 2006. The net proceeds of these
transactions were added to DoubleClick's working capital and, pending their use,
DoubleClick has invested such funds in short-term, interest-bearing investment
grade obligations.
DoubleClick offers advertising on DoubleClick Network to third party
advertisers with pricing generally determined on a CPM (cost per thousand ads
delivered) or cost per day basis. Discounts are offered based on a variety of
factors, including the duration and gross dollar amount of advertising
campaigns. Advertisements sold by DoubleClick are typically sold pursuant to
purchase order agreements, which are subject to cancellation.
DoubleClick's revenues from DoubleClick Network are received from the
advertiser that orders the ad, and DoubleClick typically pays the Web publisher
(on whose Web site such advertisement is delivered) a service fee. This service
fee is calculated as a percentage of such advertising revenues, which amount is
included in cost of revenues. DoubleClick is responsible for billing and
collecting for ads delivered on DoubleClick Network, and typically assumes the
risk of non-payment from advertisers. In addition, DoubleClick earns service
fees for providing the DART Service to Web publishers and the Closed Loop
Marketing Solutions suite of products to Internet advertisers and ad agencies.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Advertising revenues and DART service fees are generally recognized in the
period that the advertisement is delivered, provided that no significant
obligations remain and collection of the resulting receivable is probable.
DoubleClick also sells sponsorship advertising, which involves a greater degree
of integration among DoubleClick, the advertiser and the Web sites on
DoubleClick Network. These sponsorships are typically priced based on the length
of time that the sponsorship runs, rather than a CPM basis. Revenues relating to
sponsorship advertising are recognized ratably over the sponsorship period.
DoubleClick expects that revenues generated from the DoubleClick Network
will continue to account for a substantial portion of DoubleClick's revenues for
the foreseeable future. Moreover, ads delivered on Web sites of the top four Web
publishers in DoubleClick Network accounted for approximately 19.0% of
DoubleClick's revenues for the three months ended March 31, 1999. DoubleClick
typically enters into short-term contracts with Web publishers for inclusion of
their Web sites in DoubleClick Network. The failure to successfully market
DoubleClick Network, the loss of one or more of the Web sites which account for
a significant portion of the Company's revenues from the DoubleClick Network, or
any reduction in traffic on such Web sites could have a material adverse effect
on DoubleClick's business, results of operations and financial condition.
Effective January 1, 1999, AltaVista, historically the largest DoubleClick
Network Publisher, became DoubleClick's largest DART customer. See "TRANSACTIONS
AFFECTING THE COMPARABILITY OF RESULTS OF OPERATIONS" below.
To take advantage of the global reach of the Internet, DoubleClick has
established DoubleClick Networks in Europe, Asia and other international
markets. DoubleClick currently has operations in Australia, Canada, France,
Germany, United Kingdom, and Benelux (Belgium, Netherlands, and Luxembourg) and
through its business partners, in Japan, Iberoamerica, Italy and Scandinavia.
DoubleClick expects to continue to invest in building its international
operations.
DoubleClick has incurred significant losses since its inception, and as of
March 31, 1999, had an accumulated deficit of $61.6 million, of which $36.6
million related to cumulative losses and $25.0 million related to the redemption
of shares of Common Stock from certain stockholders in connection with the
recapitalization of DoubleClick that occurred simultaneously with the completion
of a private placement of the Company's securities in June 1997. In addition,
DoubleClick recorded deferred compensation of $1.5 million, which represented
the difference between the exercise price and the fair market value of
DoubleClick's common stock issuable upon the exercise of certain stock options
granted to employees. The deferred compensation is being amortized over the
vesting periods of the related options. Of the total deferred compensation
amount, approximately $1.2 million has been amortized as of March 31, 1999.
DoubleClick believes that quarter-to-quarter comparisons of its results of
operations should not be relied upon as an indication of future performance.
DoubleClick plans to significantly increase its operating expenses to increase
its sales and marketing operations, to continue its international expansion, to
upgrade and enhance its DART technology and to market and support its solutions.
DoubleClick may be unable to modify its planned spending quickly enough to
offset any unexpected revenue shortfall. If DoubleClick has a shortfall in
revenues in relation to its expenses, or if DoubleClick's expenses precede
increased revenues, then DoubleClick's results of operations and financial
condition may be materially and adversely affected. As a result of these
factors, there can be no assurance that DoubleClick will not incur significant
losses on a quarterly and annual basis for the foreseeable future.
TRANSACTIONS AFFECTING THE COMPARABILITY OF RESULTS OF OPERATIONS
In December 1996, DoubleClick entered into a Procurement and Trafficking
Agreement with Digital Equipment Corporation (acquired by Compaq in June 1998)
pursuant to which DoubleClick had the exclusive right to sell and deliver all
advertising on specified pages within the AltaVista Web site. In accordance with
this agreement, DoubleClick paid AltaVista a service fee calculated as a
percentage of the revenues derived from the delivery of advertisements on or
through the AltaVista Web site.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Effective January 1, 1999, DoubleClick changed its relationship with Compaq
by entering into an Advertising Services Agreement (the "AltaVista Advertising
Services Agreement") that superceded the Procurement and Trafficking Agreement.
Pursuant to the AltaVista Advertising Services Agreement, Compaq has agreed to
use DoubleClick's DART technology for ad delivery and to outsource to
DoubleClick certain ad sales functions for domestic, international, and local ad
sales. In consideration for such services performed by DoubleClick, Compaq pays
to DoubleClick (i) a DART Services fee for all advertising delivered by
DoubleClick on the AltaVista Web site, (ii) a sales commission based on the net
revenues generated from all advertisements sold by DoubleClick on behalf of
Compaq and (iii) a billing and collections fee for all billing and collections
services performed by DoubleClick on behalf of Compaq. Under the AltaVista
Advertising Services Agreement, the manner in which DoubleClick reports its
financial results related to the services it provides to the AltaVista Web site
has changed. Through December 31, 1998, DoubleClick recognized as revenues the
gross revenues related to ads delivered by DoubleClick to the AltaVista Web
site. Beginning January 1, 1999, pursuant to the AltaVista Advertising Services
Agreement, DoubleClick recognizes DART service fees, sales commissions and
billing and collection fees as revenues derived from the sale and delivery of
ads on the AltaVista Web site and associated services. As a result of this
change in relationship with AltaVista, overall gross margin percentage has
increased (no significant change in gross profit dollars) as DoubleClick is no
longer required to pay service fees to AltaVista for ads sold and delivered on
the AltaVista Web site and revenues include the fees earned for services
rendered. The AltaVista Advertising Services Agreement will expire on December
31, 2001, subject to prior termination in certain limited circumstances or
further extension in accordance with the terms of the AltaVista Advertising
Services Agreement.
RESULTS OF OPERATIONS
Revenues
<TABLE>
Three Months Ended March 31,
------------------------------
Dollar Percentage
1999 1998 Change Change
---- ---- ------ ----------
<S> <C> <C> <C> <C>
System revenues (a) $ 31,140 $ 13,004 18,136 139%
Revenues $ 22,087 $ 13,004 9,083 70%
Cost of revenues 10,098 8,845 1,253 14%
------ -------
Gross Profit $ 11,989 $ 4,159 7,830 188%
====== =======
</TABLE>
(a) System revenues include revenues earned by DoubleClick with respect
to network sales relating to publishers which are part of the
DoubleClick Network, fees earned from independent publishers and
advertisers which use the DART technology to deliver ad impressions,
and amounts invoiced on behalf of Compaq Computer Corp. pursuant to
the Procurement and Trafficking Agreement (in place from December
1996 to December 1998). System revenues for three months ended March
31, 1999 exclude DART service fees, sales commissions and billing and
collection fees owed by Compaq Computer Corp. pursuant to the
AltaVista Advertising Services Agreement (effective January 1, 1999).
Revenues increased to $22.1 million for the three months ended March 31,
1999, compared to $13.0 million for the three months ended March 31, 1998. The
increase in revenues was primarily due to an increase in the number of
advertisers and ads delivered on the DoubleClick Network as well as an increase
in total DART fees earned from publishers and advertisers, offset in part by
lower average price per advertisement. Revenues derived from advertising
impressions delivered to users of the AltaVista Web site represented 21.1% and
50.9% of DoubleClick's revenues and 43.4% and 50.9% of DoubleClick's systems
revenues for the three months ended March 31, 1999 and 1998, respectively. No
other Web site accounted for more than 10% revenues during the three month's
ended March 31, 1999 and 1998, and no one advertiser accounted for 10% of
revenues during the same periods. Revenues derived from advertising impressions
delivered to users of the AltaVista Web site has and will continue to represent
a significant portion of DoubleClick's revenues.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cost of Revenues
Cost of revenues consists primarily of service fees paid to Web publishers
for ads delivered to the Web sites on the DoubleClick Network. Cost of revenues
also includes other costs of delivering advertisements, including depreciation
of the ad delivery system, facilities and personnel-related costs incurred to
operate our ad delivery system and Internet access costs. Gross margin as a
percent of revenues increased to 54.3% for the three months ended March 31,
1999, compared to 32.0% for the three months ended March 31, 1998. The increase
in gross margin percent was primarily the result of an increase in revenues from
its higher margin DART services as a percentage of total revenues, including the
impact of the AltaVista Advertising Service Agreement.
Operating Expenses
<TABLE>
Three Months Ended March 31,
-------------------------------------------------------------------------------------
Percentage of Percentage of
Total Revenues(a) System Revenues(a)
-------------------------- ---------------------------- ----------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales and Marketing $ 11,057 $ 5,624 50.1% 43.2% 35.5% 43.2%
General and Administrative 4,265 2,349 19.3% 18.1% 13.7% 18.1%
Product Development 3,611 1,025 16.3% 7.9% 11.6% 7.9%
</TABLE>
(a) All references to revenues take into consideration the change in
relationship with Compaq, as discussed above.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions, advertising, trade show expenses, seminars and costs of
marketing materials. Sales and marketing expenses increased to $11.1 million for
the three months ended March 31, 1999, compared to $5.6 million for the three
months ended March 31, 1998. The increase was primarily attributable to the
increase in sales personnel, commissions associated with the increase in
revenues, costs associated with expanding international operations, and costs
related to the continued development and implementation of DoubleClick's
marketing and branding campaigns. Moreover, DoubleClick expects sales and
marketing expenses to increase on an absolute dollar basis but decrease as a
percentage of revenues as DoubleClick hires additional personnel, expands into
new markets and continues to promote DoubleClick brand.
General and Administrative. General and administrative expenses consist
primarily of compensation and professional service fees and related supplies and
materials. General and administrative expenses increased to $4.3 million for the
three months ended March 31, 1999, compared to $2.3 million for the three months
ended March 31, 1998. The increase was primarily the result of expenses related
to increased personnel and professional service fees. DoubleClick expects
general and administrative expenses to increase on an absolute dollar basis but
decrease as a percentage of revenues as DoubleClick hires additional personnel
and incurs additional costs related to the growth of its business.
Product Development. Product development expenses consist primarily of
compensation and consulting expenses and enhancements to the DART technology. To
date, all product development costs have been expensed as incurred. Product
development expenses increased to $3.6 million for the three months ended March
31, 1999, compared to $1.0 million for the three months ended March 31, 1998.
The increase was due primarily to increases
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
in product development personnel and consulting expenses. DoubleClick believes
that continued investment in product development is critical to attaining its
strategic objectives and, as a result, expects product development expenses to
increase on an absolute dollar basis but remain relatively constant as a
percentage of revenues.
Facility Relocation and Other. During the three months ended March 31,
1999, DoubleClick recorded a charge of $1.6 million for expenses related to its
planned move to a new headquarters facility. The move, expected to be completed
by end of third quarter 1999, will consolidate two leased facilities in New
York, in which DoubleClick's executive offices and principal operations are
located, into approximately 150,000 square feet of office space located at 450
West 33rd Street, New York, New York. The charge relates primarily to the
write-down of fixed assets (leasehold improvements and furniture and fixtures)
that will not be relocated to DoubleClick's new headquarters building.
Interest Income (Expense)
Net interest income increased to $1.7 million for the three months ended
March 31, 1999, compared to net interest income of $412,000 for the three months
ended March 31, 1998. The increase in net interest income was attributable to an
increase in cash, cash equivalents and short-term investments as a result of the
net proceeds received by DoubleClick from its additional public offering of
common stock in December 1998 and issuance of its 4 3/4% Convertible
Subordinated Notes in March 1999, offset in part by interest expense associated
with the 4 3/4% Convertible Subordinated Notes.
Net Loss
DoubleClick's net loss increased to $6.9 million for the three months ended
March 31, 1999, compared to $4.4 million for the three months ended March 31,
1998. The increase in the net loss was primarily due to expenses related to
DoubleClick's planned move to a new headquarters facility in addition to the
hiring of additional personnel (particularly in sales and marketing and product
development), offset in part by an increase in interest income.
FINANCIAL CONDITION AND LIQUIDITY
Financial Condition
As of March 31, 1999, DoubleClick had $331.9 million of cash and cash
equivalents and $39.3 million in short-term investments. As of March 31, 1999,
DoubleClick's principal commitments consist of $250 million of 4 3/4%
Convertible Subordinated Notes due 2006 and operating and capital lease
obligations.
Management anticipates that it will experience a substantial increase in
its capital expenditures and lease commitments consistent with its anticipated
growth in operations, infrastructure and personnel, and the scheduled build-out
of its newly leased New York headquarters facilities. DoubleClick currently
anticipates that it will continue to experience significant growth in its
operating expenses for the foreseeable future and that its operating expenses
will be a material use of DoubleClick's cash resources. DoubleClick believes
that its existing cash and cash equivalents and short-term investments will be
sufficient to meet its anticipated cash needs for working capital and capital
expenditures for at least the next twelve months.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Convertible Subordinated Notes
On March 17, 1999, DoubleClick issued 4 3/4% Convertible Subordinated Notes
due 2006 with a principal amount of $250 million (the "Convertible Notes"). The
Convertible Notes are convertible into DoubleClick's common stock at a
conversion price of $165.00 per share, subject to adjustment in certain events
and at the holders' option. Interest on the Convertible Notes is payable
semiannually in arrears on March 15 and September 15 of each year, commencing on
September 15, 1999. The Convertible Notes are unsecured and are subordinated to
all existing and future Senior Indebtedness (as defined in the Convertible Notes
indenture) of DoubleClick. If certain events occur (as described in the
Convertible Notes indenture), the Convertible Notes may be redeemed at the
option of DoubleClick, in whole or in part, beginning on March 20, 2001 at the
redemption prices set forth in the Convertible Notes indenture.
DoubleClick is obligated to file by May 21, 1999, a shelf registration
statement covering resales of the Convertible Notes and the common stock
issuable upon conversion of the Convertible Notes.
Upon occurrence of a Designated Event (as defined in the Convertible Notes
indenture) prior to the maturity of the Convertible Notes, each holder of the
Convertible Notes has the right to require DoubleClick to redeem all or any part
of the holder's Convertible Notes at a price equal to 100% of the principal
amount, plus any accrued interest, of the Convertible Notes being redeemed.
DoubleClick has or may use the net proceeds from the offering of the
Convertible Notes for general corporate purposes, including working capital to
fund anticipated operating losses, the expansion of DoubleClick's core business,
investments in new business segments and markets, capital expenditures,
acquisitions or investments in complementary businesses, products and
technologies.
Cash Flows
Net cash used in operating activities equaled $8.0 million for the three
months ended March 31, 1999, compared to $4.2 million for the three months ended
March 31, 1998. Cash used in operating activities for the three months ended
March 31, 1999 resulted from net losses, decreases in accounts payable and
accrued liabilities and an increase in prepaid expenses and other current
assets; which were partially offset by a decrease in accounts receivable and an
increase in deferred revenues.
Net cash used in investing activities equaled $32.5 million for the three
months ended March 31, 1999, compared to net cash provided by investing
activities of $800,000 for the three months ended March 31, 1998. Cash used in
investing activities for the three months ended March 31, 1999 resulted from
purchases of property and equipment, and purchases, sales and maturities of
short-term investments.
Net cash provided by financing activities equaled $245.5 million for the
three months ended March 31, 1999, compared to $62.7 million for the three
months ended March 31, 1998. Cash provided by financing activities for the three
months ended March 31, 1999 consisted primarily of net proceeds received by
DoubleClick in connection with the issuance of the Convertible Notes in March
1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Y2000
Overview
Currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
STATE OF READINESS. DoubleClick has generally completed its initial
assessment of the Year 2000 readiness of its information technology ("IT")
systems, including the hardware and software that enable DoubleClick to provide
and deliver its solutions, and its non-IT systems. DoubleClick's assessment plan
consists of (i) quality assurance testing of its internally developed
proprietary software incorporated in its solutions ("Solutions Software"); (ii)
contacting third-party vendors and licensors of material hardware, software and
services that are both directly and indirectly related to the delivery of
DoubleClick's solutions to its Web publisher and advertiser customers; (iii)
contacting vendors of material non-IT systems; (iv) assessment of repair or
replacement requirements; (v) repair or replacement; (vi) implementation; and
(vii) creation of contingency plans in the event of Year 2000 failures.
DoubleClick is conducting quality assurance testing to ensure Year 2000
compliance of all new internally developed proprietary code incorporated into
its Solutions Software. DoubleClick plans to perform a Year 2000 simulation on
its Solutions Software during the second quarter of 1999. Based on the results
of its Year 2000 simulation test, DoubleClick intends to revise the code of its
Solutions Software as necessary to improve the Year 2000 compliance of its
Solutions Software.
DoubleClick has been informed by many of its vendors of material hardware
and software components of its IT systems that the products used by DoubleClick
are currently Year 2000 compliant. DoubleClick is continuing the process of
requiring vendors of the other material hardware and software components in its
IT systems to provide assurances of their Year 2000 compliance. DoubleClick
plans to complete this process during the first half of 1999. DoubleClick has
completed an assessment of the materiality of its non-IT systems and is
continuing the process of seeking assurances of Year 2000 compliance from
providers of its material non-IT systems. In addition, DoubleClick, like all
businesses, is dependent on the continued functioning, domestically and
internationally, of basic services such as electrical utilities, telephony, mail
delivery, and transportation in order to conduct its business. While DoubleClick
is taking steps to attempt to ensure that the third parties on which it is
reliant are Year 2000 compliant, it cannot predict the likelihood of such
compliance nor the direct or indirect costs to DoubleClick of non-compliance by
those third parties or of securing alternate services from Year 2000 compliant
parties.
Pending completion of its planned Year 2000 simulation test of its
Solutions Software and its program of requesting Year 2000 assurances from
vendors and licensors of material IT and non-IT systems, DoubleClick has not yet
completed its Year 2000 compliance repair or replacement analysis, or of its
contingency plans.
COSTS. To date, DoubleClick has not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
its expenses have related to, and are expected to include, the operating costs
associated with time spent by employees in the evaluation process and Year 2000
compliance matters generally. At this time, DoubleClick does not possess the
information necessary to estimate the potential costs of revisions to its
Solutions Software should such revisions be required or the replacement of
third-party software, hardware or services that are determined not to be Year
2000 compliant. Although DoubleClick does not anticipate that such expenses will
be material, such expenses, if higher than anticipated, could have a material
adverse effect on DoubleClick's business, results of operations and financial
condition.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RISKS. DoubleClick believes that it has established an effective program to
resolve material Year 2000 issues in its sole control in a timely manner. As
noted above, however, DoubleClick has not yet completed all phases of its
program and is dependent on third parties whose progress is not within its
control. The failure by such third parties to be Year 2000 compliant could
result in a systematic failure beyond the control of DoubleClick from delivering
its services to its customers, decrease the use of the Internet or prevent users
from accessing the Web sites of its Web publishers customers, which could have
material adverse effect on DoubleClick's business, results of operations and
financial condition. In addition, there can be no assurance that DoubleClick
will not discover Year 2000 compliance problems in our Solutions Software that
will require substantial revisions which could be costly and time-consuming to
remedy. In the event that DoubleClick does not complete any of its currently
planned additional remediation prior to the Year 2000, DoubleClick could
experience significant difficulty in producing and delivering solutions and
conducting its business in the Year 2000 as it has in the past, which could
result in lost revenues, increased operating costs, the loss of customers and
other business interruptions, any of which could have a material adverse effect
on DoubleClick's business, results of operations and financial condition.
Moreover, the failure to adequately address Year 2000 compliance issues could
result in claims of mismanagement, misrepresentation or breach of contract and
related litigation, which could be costly and time-consuming to defend. The
amount of potential liability and lost revenue cannot be reasonably estimated at
this time.
CONTINGENCY PLAN. As discussed above, DoubleClick is engaged in an ongoing
Year 2000 assessment and has not yet developed any contingency plans. The
results of DoubleClick's Year 2000 simulation testing and the responses received
from third-party vendors and service providers will be taken into account in
determining the nature and extent of any contingency plans.
FORWARD-LOOKING STATEMENTS. The foregoing Year 2000 discussion and the
information contained herein is provided as a "Year 2000 Readiness Disclosure"
as defined in the Year 2000 Information and Readiness Disclosure Act of 1998
(Public Law 105-271, 112 Stat. 2386) enacted on October 19, 1998 and contains
"forward-looking statements" within the meaning of the Private Securities
Litigation reform Act of 1995. Such statements, including without limitation,
anticipated costs and the dates by which DoubleClick expects to complete certain
actions, are based on management's best current estimates, which were derived
utilizing numerous assumptions about future events, including the continued
availability of certain resources, representations received from third parties
and other factors. However, there can be no guarantee that these estimates will
be achieved, and actual results could differ materially form those anticipated.
Specific factors that might cause such material difference include, but are not
limited to, the ability to identify and remediate all relevant systems, results
of Year 2000 testing, adequate resolution of Year 2000 issues by governmental
agencies, businesses and other third parties who are outsourcing service
providers, suppliers, and vendors of DoubleClick, unanticipated system costs,
the adequacy of and ability to implement contingency plans and uncertainties.
The "forward-looking statements" made in the foregoing Year 2000 discussion
speak only as of the date on which such statements are made, and DoubleClick
undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events.
CURRENCY RATE FLUCTUATIONS
DoubleClick's results of operations, financial position, and cash flows are
affected by changes in the relative values of non-U.S. currencies to the U.S.
dollar. DoubleClick does not use derivative financial instruments to limit its
foreign currency risk exposure. Therefore, volatility in currency exchange rates
could have a material adverse effect on those revenues and assets denominated in
non-U.S. currencies.
INTEREST RATE RISK
DoubleClick's investments are classified as available for sale securities
therefore changes in the market's interest rates effect the value of the
investment as recorded by DoubleClick and are recorded as unrealized gains and
losses on the financial statements.
<PAGE>
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS BASED ON OUR CURRENT
EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS ABOUT DOUBLECLICK AND OUR
INDUSTRY. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES.
DOUBLECLICK'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, AS MORE FULLY
DESCRIBED IN THIS SECTION AND ELSEWHERE IN THIS REPORT. DOUBLECLICK UNDERTAKES
NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON,
EVEN IF NEW INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.
LIMITED OPERATING HISTORY
We were incorporated in January 1996 and have a limited operating history.
An investor in our common stock must consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets, including the Internet advertising market. These risks include our:
- ability to sustain historical revenue growth rates;
- dependence on a continuing relationship with AltaVista;
- reliance on the DoubleClick Network;
- need to manage our expanding operations;
- competition;
- ability to attract, retain and motivate qualified personnel;
- ability to maintain our current, and develop new, strategic relationships
with Web publishers;
- ability to anticipate and adapt to the changing Internet market; and
- ability to attract and retain a large number of advertisers from a
variety of industries.
We also depend on the growing use of the Internet for advertising, commerce
and communication, and on general economic conditions. We cannot assure you that
our business strategy will be successful or that we will successfully address
these risks. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for detailed information on our limited
operating history.
HISTORY OF LOSSES AND ANTICIPATION OF
CONTINUED LOSSES
We incurred net losses of $3.2 million for the period from January 23, 1996
(inception) through December 31, 1996, $8.4 million for the year ended December
31, 1997, and $18.2 million for the year ended December 31, 1998. For the three
months ended March 31, 1999 we incurred a net loss of $6.9 million and, as of
March 31, 1999, our accumulated deficit was $61.6 million. We have not achieved
profitability and expect to continue to incur operating losses at least into the
year 2000. We expect to continue to incur significant operating and capital
expenditures and, as a result, we will need to generate significant revenues to
achieve and maintain profitability. Although our revenues have grown in recent
quarters, we cannot assure you that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow slower than we anticipate, or if operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial condition will be materially and adversely affected.
OUR DEPENDENCE ON ALTAVISTA
Approximately 21.1% and 50.9% of revenues and 43.4% and 50.9% of systems
revenues for the three months ended March 31, 1999 and 1998, respectively,
resulted from advertisements delivered on or through the AltaVista Web site. On
January 20, 1999, DoubleClick agreed with Compaq to enter into an Advertising
Services Agreement to replace the existing Procurement and Trafficking
Agreement. The Advertising Services Agreement is effective as of January 1, 1999
and will expire on December 31, 2001, subject to prior termination in certain
limited circumstances or further extension in accordance with the terms of the
Advertising Services Agreement. The loss of AltaVista or any significant
reduction in traffic on or through the AltaVista Web site would materially and
adversely affect our business, results of operations and financial condition.
WEB PUBLISHER CONCENTRATION
We derive a substantial portion of our DoubleClick Network revenues from
ads we deliver on the Web sites of a limited number of Web publishers.
Approximately 19.0% of our revenues for the three months ended March 31, 1999
and approximately 63.4% of our revenues for the three months ended March 31,
1998 resulted from ads delivered on the Web sites of the top four Web publishers
on the DoubleClick Network. Our business, results of operations and financial
condition could be materially and adversely affected by the loss of one or more
of the Web publishers which account for a significant portion of our DoubleClick
Network revenues or any significant reduction in traffic on such Web publisher's
Web sites. In addition, advertisers or Web publishers may leave the DoubleClick
Network because of such a loss, which could materially and adversely affect our
business, results of operations and financial condition. Typically we enter into
short-term contracts with Web publishers for inclusion of their Web sites in the
DoubleClick Network. Since these contracts are short-term, we will have to
negotiate new contracts or renewals in the future which may have terms that are
not as favorable to us as the terms of the existing contracts. Our business,
results of operations and financial condition could be materially and adversely
affected by such new contracts or renewals.
OUR RELIANCE ON THE DOUBLECLICK NETWORK
Since the third quarter of 1996, we have derived substantially all of our
revenues from advertisements we deliver to Web sites on the DoubleClick Network.
We expect that the DoubleClick Network will continue to account for a
substantial portion of our revenues for the foreseeable future. The DoubleClick
Network consists of Web sites of a limited number of Web publishers with which
we have short-term contracts. We cannot assure you that such Web publishers will
remain associated with the DoubleClick Network, that any DoubleClick Network Web
site will maintain consistent or increasing levels of traffic over time, or that
we will be able to timely or effectively replace any exiting DoubleClick Network
Web site with other Web sites with comparable traffic patterns and user
demographics. Our failure to successfully market the DoubleClick Network, the
loss of one or more of the Web publishers which account for a significant
portion of our revenues from the DoubleClick Network, or the failure of the Web
sites on the DoubleClick Network to maintain consistent or increasing levels of
traffic would materially and adversely affect our business, results of
operations and financial condition
QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS
Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, not all of which are in our control. These
factors include:
- advertiser and Web publisher demand for our solutions;
- user traffic levels and the number of available impressions on the
DoubleClick Network's Web sites;
- seasonal fluctuations in Internet usage;
- changes in service fees we pay to Web publishers;
- changes in the growth rate of Internet usage;
- the commitment of advertising budgets to Internet advertising;
- the mix of revenues from our various Internet advertising solutions;
- the timing and amount of costs relating to the expansion of our
operations;
- changes in our pricing policies or those of our competitors;
- the introduction of new solutions by us or our competitors;
- the mix of domestic and international sales;
- costs related to acquisitions of technology or businesses; and
- general economic and market conditions.
Our revenues for the foreseeable future will remain dependent on user
traffic levels and advertising activity on the DoubleClick Network. Such future
revenues are difficult to forecast. In addition, we plan to significantly
increase our operating expenses to increase our sales and marketing operations,
to continue our international expansion, to upgrade and enhance our DART
technology, and to market and support our solutions. We may be unable to adjust
spending quickly enough to offset any unexpected revenue shortfall. If we have a
shortfall in revenues in relation to our expenses, or if our expenses precede
increased revenues, then our business, results of operations and financial
condition would be materially and adversely affected. Such a result would likely
affect the market price of our common stock in a manner which may be unrelated
to our long-term operating performance.
We believe that advertising sales in traditional media, such as television
and radio, generally are lower in the first calendar quarter of each year. If
our market makes the transition from an emerging to a more developed medium,
seasonal and cyclical patterns may develop in our industry. Our revenues may
also be affected by seasonal and cyclical patterns in Internet advertising
spending if they emerge.
Due to all of the foregoing factors and the other risks discussed in this
section, you should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. It is possible that in some
future periods our results of operations may be below the expectations of public
market analysts and investors. In this event, the price of our common stock may
fall.
NEED TO MANAGE GROWTH
To successfully implement our business plan in the rapidly evolving market
for Internet advertising requires an effective planning and management process.
We continue to increase the scope of our operations both domestically and
internationally, and we have grown our workforce substantially. As of March 31,
1996, we had a total of 13 employees and, as of March 31, 1999, we had a total
of 549 employees. In addition, we plan to continue to expand our sales and
marketing and customer support organizations both domestically and
internationally. This growth has placed, and our anticipated future growth in
our operations will continue to place, a significant strain on our management
systems and resources. We expect that we will need to continue to improve our
financial and managerial controls and reporting systems and procedures, and will
need to continue to expand, train and manage our workforce. Our future
performance may also depend on the effective integration of acquired businesses.
Such integration, even if successful, may take a significant period of time and
expense, and may place a significant strain on our resources. Our business,
results of operations and financial condition will be materially and adversely
affected if we are unable to effectively manage our expanding operations or the
relocation of our data operations.
RECENT DEVELOPMENT OF THE INTERNET ADVERTISING MARKET AND
UNPROVEN ACCEPTANCE AND EFFECTIVENESS OF WEB ADVERTISING
Our future success is highly dependent on an increase in the use of the
Internet as an advertising medium. The Internet advertising market is new and
rapidly evolving, and it cannot yet be compared with traditional advertising
media to gauge its effectiveness. As a result, demand and market acceptance for
Internet advertising solutions is uncertain. Most of our current or potential
advertising customers have little or no experience using the Internet for
advertising purposes and they have allocated only a limited portion of their
advertising budgets to Internet advertising. The adoption of Internet
advertising, particularly by those entities that have historically relied upon
traditional media for advertising, requires the acceptance of a new way of
conducting business, exchanging information and advertising products and
services. Such customers may find Internet advertising to be less effective for
promoting their products and services relative to traditional advertising media.
In addition, most of our current and potential Web publisher customers have
little or no experience in generating revenues from the sale of advertising
space on their Web sites. We cannot assure you that the market for Internet
advertising will continue to emerge or become sustainable. If the market for
Internet advertising fails to develop or develops more slowly than we expect,
then our business, results of operations and financial condition could be
materially and adversely affected.
There are currently no standards for the measurement of the effectiveness
of Internet advertising and standard measurements may need to be developed to
support and promote Internet advertising as a significant advertising medium.
Our advertising customers may challenge or refuse to accept our or third-party
measurements of advertisement delivery results, and our customers may not accept
any errors in such measurements. In addition, the accuracy of database
information used to target advertisements is essential to the effectiveness of
Internet advertising that may be developed in the future. The information in our
database, like any database, may contain inaccuracies which our customers may
not accept.
Substantially all of our revenues are derived from the delivery of banner
advertisements. If advertisers determine that banner advertising is an
ineffective or unattractive advertising medium, we cannot assure you that we
will be able to effectively make the transition to any other form of Internet
advertising. Also, there are "filter" software programs that limit or prevent
advertising from being delivered to a user's computer. The commercial viability
of Internet advertising, and our business, results of operations and financial
condition, would be materially and adversely affected by Web users' widespread
adoption of such software.
PRIVACY CONCERNS
In recent months, the U.S. federal and various state governments have
proposed limitations on the collection and use of information regarding Internet
users. In October 1998, the European Union adopted a directive that may result
in limitations on our collection and use of information regarding Internet users
in Europe. Our DART technology targets advertising to users through the use of
"cookies" and other non-personally-identifying information. The effectiveness of
our DART technology could be limited by any regulation or limitation in the
collection or use of information regarding Internet users. Since many of the
limitations are still in the proposal stage, we cannot yet determine the full
impact of these regulations on our business.
UNPROVEN BUSINESS MODEL
Our business model is to generate revenues solely by providing Internet
advertising solutions to advertisers, ad agencies and Web publishers. The profit
potential for our business model is unproven. To be successful, both Internet
advertising and our solutions will need to achieve broad market acceptance by
advertisers, ad agencies and Web publishers. Our ability to generate significant
revenues from advertisers will depend, in part, on our ability to contract with
Web publishers that have Web sites with adequate available ad space inventory.
Further, these Web sites must generate sufficient user traffic with demographic
characteristics attractive to our advertisers. The intense competition among
Internet advertising sellers has led to the creation of a number of pricing
alternatives for Internet advertising. These alternatives make it difficult for
us to project future levels of advertising revenues and applicable gross margin
that can be sustained by us or the Internet advertising industry in general.
Market acceptance of our new solutions, including DoubleClick Local and the
Closed Loop Marketing Solutions suite of products, will depend on the continued
emergence of Internet commerce, communication and advertising, and market demand
for our solutions. We cannot assure you that the market for our new solutions
will develop or that demand for our new solutions will emerge or become
sustainable.
YEAR 2000 RISKS
Currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
We have generally completed our preliminary assessment of our Year 2000
readiness. We plan to perform a Year 2000 simulation on our software during the
second quarter of 1999, following the implementation of revisions to our
software contemplated in the first quarter of 1999. We are also in the process
of contacting certain third-party vendors, licensors and providers of software,
hardware and services regarding their Year 2000 readiness. Following this
testing and after contacting these vendors and licensors, we will be better able
to make a complete evaluation of our Year 2000 readiness, to determine what
costs will be necessary to be Year 2000 compliant, and to determine whether
contingency plans need to be developed.
RISK OF SYSTEM FAILURE
The DART technology resides on a computer system located in our New York
City offices and in DoubleClick data centers in New Jersey, California,
Australia, Brazil, England, France, Germany, Netherlands and Sweden. This
system's continuing and uninterrupted performance is critical to our success.
Customers may become dissatisfied by any system failure that interrupts our
ability to provide our services to them, including failures affecting our
ability to deliver advertisements without significant delay to the viewer.
Sustained or repeated system failures would reduce the attractiveness of our
solutions to advertisers, ad agencies and Web publishers. Slower response time
or system failures may also result from straining the capacity of our deployed
software or hardware due to an increase in the volume of advertising delivered
through our servers. To the extent that we do not effectively address any
capacity constraints or system failures, our business, results of operations and
financial condition would be materially and adversely affected.
Our operations are dependent on our ability to protect our computer systems
against damage from fire, power loss, water damage, telecommunications failures,
vandalism and other malicious acts, and similar unexpected adverse events. In
addition, interruptions in our solutions could result from the failure of our
telecommunications providers to provide the necessary data communications
capacity in the time frame we require. Despite precautions we have taken,
unanticipated problems affecting our systems have from time to time in the past
caused, and in the future could cause, interruptions in the delivery of our
solutions. DoubleClick's ad serving capabilities, operational information and
data storage are presently redundant, as well as archived. We expect all of our
back-end systems for disaster recovery to be fully redundant by the second
quarter of 1999. Our business, results of operations and financial condition
could be materially and adversely affected by any damage or failure that
interrupts or delays our operations.
OUR MARKETS ARE HIGHLY COMPETITIVE
Our markets, namely Internet advertising and related products and services,
are intensely competitive. We expect such competition to continue to increase
because our markets pose no substantial barriers to entry. Competition may also
increase as a result of industry consolidation. We believe that our ability to
compete depends upon many factors both within and beyond our control, including
the following:
- the timing and market acceptance of new solutions and enhancements to
existing solutions developed either by us or our competitors;
- customer service and support efforts;
- sales and marketing efforts; and
- the ease of use, performance, price and reliability of solutions
developed either by DoubleClick or its competitors.
We compete for Internet advertising revenues with large Web publishers and
Web search engine companies, such as America Online, Excite, Lycos, Microsoft,
Infoseek and Yahoo!. Further, our DoubleClick Network competes with a variety of
Internet advertising networks, including 24/7 Media. In marketing our
DoubleClick Network and DART Service to Web publishers, we also compete with
providers of ad servers and related services, including NetGravity and AdForce.
We also encounter competition from a number of other sources, including content
aggregation companies, companies engaged in advertising sales networks,
advertising agencies, and other companies which facilitate Internet advertising.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. These factors may allow them to respond more quickly than
we can to new or emerging technologies and changes in customer requirements. It
may also allow them to devote greater resources than we can to the development,
promotion and sale of their products and services. Such competitors may also
engage in more extensive research and development, undertake more far-reaching
marketing campaigns, adopt more aggressive pricing policies and make more
attractive offers to existing and potential employees, strategic partners,
advertisers and Web publishers. We cannot assure you that our competitors will
not develop products or services that are equal or superior to our solutions or
that achieve greater market acceptance than our solutions. In addition, current
and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our prospective advertising,
ad agency and Web publisher customers. As a result, it is possible that new
competitors may emerge and rapidly acquire significant market share. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share. We cannot assure you that we will be able to compete
successfully or that competitive pressures will not materially and adversely
affect our business, results of operations or financial condition.
Companies doing business on the Internet, including ours, must also compete
with television, radio, cable and print (traditional advertising media) for a
share of advertisers' total advertising budgets. Advertisers may be reluctant to
devote a significant portion of their advertising budget to Internet advertising
if they perceive the Internet to be a limited or ineffective advertising medium.
RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS OR INVESTMENTS
We may acquire or make investments in complementary businesses, products,
services or technologies. From time to time we have had discussions with
companies regarding our acquiring, or investing in, their businesses, products,
services or technologies. We cannot assure you that we will be able to identify
suitable acquisition or investment candidates. Even if we do identify suitable
candidates, we cannot assure you that we will be able to make such acquisitions
or investments on commercially acceptable terms. If we buy a company, we could
have difficulty in assimilating that company's personnel and operations. In
addition, the key personnel of the acquired company may decide not to work for
us. If we make other types of acquisitions, we could have difficulty in
assimilating the acquired products, services or technologies into our
operations. These difficulties could disrupt our ongoing business, distract our
management and employees, increase our expenses and adversely affect our results
of operations due to accounting requirements such as goodwill. Furthermore, we
may incur debt or issue equity securities to pay for any future acquisitions.
The issuance of equity securities could be dilutive to our existing
stockholders.
DEPENDENCE ON KEY PERSONNEL
Our future success depends to a significant extent on the continued service
of our key technical, sales and senior management personnel, in particular,
Kevin J. O'Connor, our Chief Executive Officer and Chairman of the Board of
Directors, Kevin P. Ryan, our President and Chief Operating Officer, and Dwight
A. Merriman, our Chief Technical Officer. We have no employment agreements with
any of these executives. The loss of the services of Messrs. O'Connor, Ryan or
Merriman, or certain other key employees, would likely have a material adverse
effect on our business, results of operations and financial condition. Our
future success also depends on our continuing to attract, retain and motivate
highly skilled employees. Competition for employees in our industry is intense.
We may be unable to retain our key employees or attract, assimilate or retain
other highly qualified employees in the future. We have from time to time in the
past experienced, and we expect to continue to experience in the future,
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications.
DEPENDENCE ON THE WEB INFRASTRUCTURE
Our success will depend, in large part, upon the maintenance of the Web
infrastructure, such as a reliable network backbone with the necessary speed,
data capacity and security, and timely development of enabling products such as
high speed modems, for providing reliable Web access and services and improved
content. We cannot assure you that the Web infrastructure will continue to
effectively support the demands placed on it as the Web continues to experience
increased numbers of users, frequency of use or increased bandwidth requirements
of users. Even if the necessary infrastructure or technologies are developed, we
may have to spend considerable amounts to adapt our solutions accordingly.
Furthermore, the Web has experienced a variety of outages and other delays due
to damage to portions of its infrastructure. Such outages and delays could
impact the Web sites of Web publishers using our solutions and the level of user
traffic on Web sites on the DoubleClick Network.
DEPENDENCE ON PROPRIETARY RIGHTS AND RISK OF INFRINGEMENT
Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of patent, copyright, trade secret and trademark law. We have filed
three patent applications in the United States and one patent application
internationally. In addition, we apply to register our trademarks in the United
States and internationally. (We own the registration for the DoubleClick
trademark in the United States.) We cannot assure you that any of our patent
applications or trademark applications will be approved. Even if they are
approved, such patents or trademarks may be successfully challenged by others or
invalidated. If our trademark registrations are not approved because third
parties own such trademarks, our use of such trademarks will be restricted
unless we enter into arrangements with such third parties which may be
unavailable on commercially reasonable terms.
We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners, and generally control access to
and distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. We cannot assure you that the steps we have taken
will prevent misappropriation of our solutions or technologies, particularly in
foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.
Our DART technology collects and utilizes data derived from user activity
on the DoubleClick Network and the Web sites of Web publishers using our
solutions. This data is used for ad targeting and predicting ad performance.
Although we believe that we have the right to use such data and the compilation
of such data in our database, we cannot assure you that any trade secret,
copyright or other protection will be available for such information. In
addition, others may claim rights to such information. Further, pursuant to our
contracts with Web publishers using our solutions, we are obligated to keep
certain information regarding each Web publisher confidential.
We have licensed, and we may license in the future, elements of our
trademarks, trade dress and similar proprietary rights to third parties. While
we attempt to ensure that the quality of our brand is maintained by these
business partners, such partners may take actions that could materially and
adversely affect the value of our proprietary rights or our reputation.
We cannot assure you that any of our proprietary rights will be viable or
of value in the future since the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries is
uncertain and still evolving. Furthermore, third parties may assert infringement
claims against us. From time to time we have been, and we expect to continue to
be, subject to claims in the ordinary course of our business, including claims
of alleged infringement of the trademarks and other intellectual property rights
of third parties by us or the Web publishers with Web sites in the DoubleClick
Network. Such claims and any resultant litigation, should it occur, could
subject us to significant liability for damages and could result in the
invalidation of our proprietary rights. In addition, even if we prevail, such
litigation could be time-consuming and expensive to defend, and could result in
the diversion of our time and attention, any of which could materially and
adversely affect our business, results of operations and financial condition.
Any claims or litigation from third parties may also result in limitations on
our ability to use the trademarks and other intellectual property subject to
such claims or litigation unless we enter into arrangements with the third
parties responsible for such claims or litigation which may be unavailable on
commercially reasonable terms.
RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE
The Internet and Internet advertising markets are characterized by rapidly
changing technologies, evolving industry standards, frequent new product and
service introductions, and changing customer demands. Our future success will
depend on our ability to adapt to rapidly changing technologies and to enhance
existing solutions and develop and introduce a variety of new solutions to
address our customers' changing demands. We may experience difficulties that
could delay or prevent the successful design, development, introduction or
marketing of our solutions. In addition, our new solutions or enhancements must
meet the requirements of our current and prospective customers and must achieve
significant market acceptance. Material delays in introducing new solutions and
enhancements may cause customers to forego purchases of our solutions and
purchase those of our competitors.
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
We have operations in a number of international markets. We intend to
continue to expand our international operations and international sales and
marketing efforts. To date, we have limited experience in developing localized
versions of our solutions and in marketing, selling and distributing our
solutions internationally. We have established DoubleClick Networks in
Australia, Canada, France, Germany, Benelux (Belgium, Netherlands, and
Luxembourg) and the United Kingdom. In Japan, Iberoamerica (Spain, Portugal and
Latin America), Italy and Scandinavia (Sweden, Norway, Finland, and Denmark), we
are relying on our business partners to conduct operations, establish local
networks, aggregate Web publishers and coordinate sales and marketing efforts.
Our success in such markets is directly dependent on the success of our business
partners and their dedication of sufficient resources to our relationship.
International operations are subject to other inherent risks, including:
- the impact of recessions in economies outside the United States;
- changes in regulatory requirements;
- reduced protection for intellectual property rights in some countries;
- potentially adverse tax consequences;
- difficulties and costs of staffing and managing foreign operations;
- political and economic instability;
- fluctuations in currency exchange rates; and
- seasonal fluctuations in Internet usage.
These risks may materially and adversely affect our business, results of
operations or financial condition.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent. The most recent session of
the United States Congress resulted in Internet laws regarding children's
privacy, copyrights and taxation. Such legislation could dampen the growth in
use of the Web generally and decrease the acceptance of the Web as a
communications, commercial and advertising medium. The governments of other
states or foreign countries might attempt to regulate our transmissions or levy
sales or other taxes relating to our activities. The European Union recently
enacted its own privacy regulations that may result in limits on the collection
and use of certain user information. The laws governing the Internet, however,
remain largely unsettled, even in areas where there has been some legislative
action. It may take years to determine whether and how existing laws such as
those governing intellectual property, privacy, libel and taxation apply to the
Internet and Internet advertising. In addition, the growth and development of
the market for Internet commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad, that may impose
additional burdens on companies conducting business over the Internet. Our
business, results of operations and financial condition could be adversely
affected by the adoption or modification of laws or regulations relating to the
Internet.
SUBSTANTIAL INFLUENCE BY OFFICERS AND DIRECTORS
The executive officers, directors and entities affiliated with them
beneficially own approximately a significant percentage of our outstanding
common stock. These stockholders may be able to exercise substantial influence
over all matters requiring approval by our stockholders, including the election
of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in control of DoubleClick.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile and could be subject to wide
fluctuations. In addition, the stock market has experienced extreme price and
volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile. Investors may be unable to resell their
shares of our common stock at or above the offering price. In the past,
companies that have experienced volatility in the market price of their stock
have been the object of securities class action litigation. If we were the
object of securities class action litigation, it could result in substantial
costs and a diversion of management's attention and resources.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Changes in Securities:
NONE
(b) Use of Proceeds
On February 19, 1998, the Securities and Exchange Commission declared
effective the Company's Registration Statement on Form S-1 (File No.
333-42323). Pursuant to this Registration Statement, and the Abbreviated
Registration Statement filed on February 19, 1998 pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, as amended, on February 25,
1998, DoubleClick completed the initial public offering of 4,025,000 shares
of its Common Stock at an initial public offering price of $17.00 per share
(the "Offering"). The Offering was managed by Goldman, Sachs & Co., BT
Alex.Brown and Cowen & Company. Proceeds to DoubleClick, after calculation
of the underwriters discount and commission, from the Offering totaled
approximately $62.5 million net of offering costs of $1.1 million. None of
the expenses incurred in the offering were direct or indirect payments to
directors, officers, general partners of the issuer or their associates, to
persons owning ten percent or more of any class of equity securities of the
issuer or to affiliates of the issuer. During the nine months ended
September 30, 1998, DoubleClick used $26.8 million of the proceeds from the
Offering toward general corporate purposes, including working capital, and
toward the expansion of DoubleClick's international operations and sales and
marketing capabilities. None of these expenses were direct or indirect
payments to directors, officers, general partners of the issuer or their
associates, to persons owning ten percent or more of any class of equity
securities of the issuer or to affiliates of the issuer.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(a) The following Exhibits are filed as part of this report:
6.1 Indenture, dated as of March 22, 1999, between DoubleClick Inc.
and The Bank of New York, as trustee.
6.2 Registration Agreement, dated as of March 22, 1999, between
DoubleClick Inc. and the Initial Purchasers as named on Schedule
I to the Purchase Agreement.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
DoubleClick filed three reports on the form 8-K during the three months
ended on March 31, 1999. One Form 8-K was filed on February 3, 1999 announcing
the Alta Vista Advertising Services Agreement. One form 8-K was filed on March
15,1999 announcing a two-for-one stock split and the issuance of the 4 3/4%
Convertible Subordinated Notes. One Form 8-K was filed on March 15, 1999 for
purposes of filing the Alta Vista Advertising Services Agreement.
<PAGE>
ITEM 7. SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DOUBLECLICK INC.
Date: May 13, 1999 By: /s/ STEPHEN COLLINS
-------------------
Stephen Collins
CHIEF FINANCIAL OFFICER (PRINCIPAL
FINANCIAL OFFICER)
EXHIBIT 6.1
================================================================================
DoubleClick Inc.
to
The Bank of New York,
as Trustee
___________
Indenture
Dated as of March 22, 1999
4.75% Convertible Subordinated Notes due 2006
================================================================================
v
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.01. Definitions ...................................................1
Section 1.02. Other Definitions .............................................7
Section 1.03. Incorporation by Reference of Trust Indenture Act .............8
Section 1.04. Rules of Construction .........................................8
ARTICLE II
THE SECURITIES
Section 2.01. Form and Dating ...............................................9
Section 2.02. Execution, Authentication and Delivery .......................10
Section 2.03. Registrar, Paying Agent and Conversion Agent .................11
Section 2.04. Paying Agent to Hold Money in Trust ..........................11
Section 2.05. Noteholder Lists .............................................11
Section 2.06. Transfer and Exchange ........................................12
Section 2.07. Replacement Securities .......................................15
Section 2.08. Outstanding Securities .......................................16
Section 2.09. Treasury Securities ..........................................16
Section 2.10. Temporary Securities; Exchange of Global
Security for Definitive Securities ..........................16
Section 2.11. Cancellation .................................................17
Section 2.12. Payment of Interest: Interest Rights Preserved ...............17
Section 2.13. Computation of Interest ......................................18
Section 2.14. CUSIP Number .................................................19
Section 2.15. Regulation S .................................................19
Section 2.16. Persons Deemed Owners ........................................19
ARTICLE III
REDEMPTION
Section 3.01. Notices to Trustee ...........................................19
Section 3.02. Selection of Securities to be Redeemed .......................19
Section 3.03. Notice of Redemption .........................................20
Section 3.04. Effect of Notice of Redemption ...............................21
Section 3.05. Deposit of Redemption Price ..................................21
Section 3.06. Securities Redeemed in Part ..................................22
Section 3.07. Optional Redemption ..........................................22
Section 3.08. Designated Event Offer .......................................22
Section 3.09. Mandatory Redemption .........................................24
ARTICLE IV
COVENANTS
Section 4.01. Payment of Securities ........................................24
Section 4.02. SEC Reports ..................................................25
Section 4.03. Compliance Certificate .......................................25
Section 4.04. Stay, Extension and Usury Law ................................26
Section 4.05. Corporate Existence ..........................................26
Section 4.06. Taxes ........................................................26
Section 4.07. Designated Event .............................................27
Section 4.08. Investment Company Act .......................................27
ARTICLE V
CONVERSION
Section 5.01. Conversion Privilege .........................................27
Section 5.02. Conversion Procedure .........................................28
Section 5.03. Fractional Shares ............................................29
Section 5.04. Taxes on Conversion ..........................................29
Section 5.05. Company to Provide Stock .....................................29
Section 5.06. Adjustment of Conversion Price ...............................29
Section 5.07. No Adjustment ................................................33
Section 5.08. Other Adjustments ............................................33
Section 5.09. Adjustments for Tax Purposes .................................34
Section 5.10. Adjustments by the Company ...................................34
Section 5.11. Notice of Adjustment .........................................34
Section 5.12. Notice of Certain Transactions ...............................34
Section 5.13. Effect of Reclassifications, Consolidations,
Mergers, Continuances or Sales on Conversion
Privilege ...............................................34
Section 5.14. Trustee's Disclaimer .........................................35
Section 5.15. Cancellation of Converted Securities .........................36
Section 5.16. Restriction on Common Stock Issuable Upon Conversion .........36
ARTICLE VI
SUBORDINATION
Section 6.01. Agreement to Subordinate .....................................37
Section 6.02. No Payment on Securities if Senior Debt in Default ...........37
Section 6.03. Distribution on Acceleration of Securities;
Dissolution and Reorganization; Subrogation of
Securities ..............................................38
Section 6.04. Reliance by Senior Debt on Subordination Provisions ..........41
Section 6.05. No Waiver of Subordination Provisions ........................41
Section 6.06. Trustee's Relation to Senior Debt ............................41
Section 6.07. Other Provisions Subject Hereto ..............................42
ARTICLE VII
SUCCESSORS
Section 7.01. Merger, Consolidation or Sale of Assets ......................42
Section 7.02. Successor Corporation Substituted ............................43
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. Events of Default ............................................44
Section 8.02. Acceleration .................................................45
Section 8.03. Other Remedies ...............................................46
Section 8.04. Waiver of Past Defaults ......................................46
Section 8.05. Control by Majority ..........................................46
Section 8.06. Limitation on Suits ..........................................46
Section 8.07. Rights of Noteholders to Receive Payment .....................47
Section 8.08. Collection Suit by Trustee ...................................47
Section 8.09. Trustee May File Proofs of Claim .............................47
Section 8.10. Priorities ...................................................48
Section 8.11. Undertaking for Costs ........................................49
Section 8.12. Restoration of Rights and Remedies ...........................49
Section 8.13. Rights and Remedies Cumulative ...............................49
Section 8.14. Delay or Omission Not Waiver .................................49
ARTICLE IX
TRUSTEE
Section 9.01. Duties of Trustee ............................................50
Section 9.02. Rights of Trustee ............................................50
Section 9.03. Individual Rights of Trustee .................................52
Section 9.04. Trustee's Disclaimer .........................................52
Section 9.05. Notice of Defaults ...........................................52
Section 9.06. Reports by Trustee to Noteholders ............................52
Section 9.07. Compensation and Indemnity ...................................52
Section 9.08. Replacement of Trustee .......................................53
Section 9.09. Successor Trustee by Merger, Etc. ............................54
Section 9.10. Eligibility; Disqualification ................................54
Section 9.11. Preferential Collection of Claims Against Company ............54
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. Termination of the Company's Obligations ....................55
Section 10.02. Repayment to Company ........................................56
Section 10.03. Reinstatement ...............................................56
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.01. Without Consent of Noteholders ..............................57
Section 11.02. With Consent of Noteholders .................................57
Section 11.03. Compliance with Trust Indenture Act .........................59
Section 11.04. Revocation and Effect of Consents ...........................59
Section 11.05. Notation on or Exchange of Securities .......................59
Section 11.06. Trustee Protected ...........................................60
Section 11.07. Trustee to Sign Supplemental Indentures .....................60
Section 11.08. Payment for Consent .........................................61
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls ................................61
Section 12.02. Notices .....................................................61
Section 12.03. Communication by Noteholders with Other Noteholders .........61
Section 12.04. Certificate and Opinion as to Conditions Precedent ..........62
Section 12.05. Statements Required in Certificate or Opinion ...............62
Section 12.06. Rules by Trustee and Agents .................................63
Section 12.07. Legal Holidays ..............................................63
Section 12.08. No Recourse Against Others ..................................63
Section 12.09. Counterparts ................................................63
Section 12.10. Variable Provisions .........................................63
Section 12.11. GOVERNING LAW ...............................................64
Section 12.12. No Adverse Interpretation of Other Agreements ...............64
Section 12.13. Successors ..................................................64
Section 12.14. Severability ................................................64
Section 12.15. Table of Contents, Headings, Etc. ...........................65
EXHIBIT A FORM OF CONVERTIBLE SUBORDINATED NOTE............................A-1
EXHIBIT B FORM OF TRANSFER CERTIFICATE.....................................B-1
EXHIBIT C FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE...............C-1
EXHIBIT D FORM OF RESTRICTED COMMON STOCK LEGEND...........................D-1
EXHIBIT E FORM OF TRANSFER CERTIFICATE FOR TRANSFER OF
RESTRICTED COMMON STOCK..............................E-1
INDENTURE dated as of March 22, 1999 between DoubleClick
Inc., a Delaware corporation (the "Company"), and The Bank of New
York, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the
Company's 4.75% Convertible Subordinated Notes due 2006 (the
"Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
. tion 1.01. Definitions
"Affiliate" of any specified person means any other person
directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such person, whether
through the ownership of voting securities or by agreement or
otherwise.
"Agent" means any Registrar, Paying Agent or Conversion
Agent.
"Board of Directors" means the board of directors of the
Company or any authorized committee of such board of directors.
"Board Resolution" means a copy of a resolution of the Board
of Directors certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and
delivery to the Trustee.
"Business Day" means any day that is not a Legal Holiday.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of
equity interests in any entity, including, without limitation,
corporate stock and partnership interests.
"Change of Control" will be deemed to have occurred when:
(i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of
shares representing more than 50% of the combined voting power of the
then outstanding securities entitled to vote generally in elections
of directors of the Company ("Voting Stock"), (ii) the Company or any
subsidiary of the Company consolidates with or merges into any other
person, or any other person merges into the Company or any subsidiary
of the Company, unless the stockholders of the Company immediately
before such transaction own, directly or indirectly immediately
following such transaction, at least a majority of the combined
voting power of the then outstanding voting securities entitled to
vote generally in elections of directors of the Company or the
corporation resulting from such transaction in substantially the same
respective proportions as their ownership of the Voting Stock
immediately before such transaction, (iii) the Company or the Company
and its Subsidiaries, taken as a whole, sells, assigns, conveys,
transfers or leases all or substantially all assets of the Company or
of the Company and its Subsidiaries, taken as a whole, as applicable,
(other than to one or more wholly-owned Subsidiaries of the Company)
or (iv) any time the Continuing Directors do not constitute a
majority of the board of directors of the Company (or, if applicable,
a successor corporation to the Company); provided, however, that (a)
a Change of Control under clause (i), (ii) or (iii) above shall not
be deemed to have occurred if the Daily Market Price per share of
Common Stock for any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of the
Change of Control or the public announcement of the Change of Control
(in the case of a Change of Control under clause (i) above) or the
period of 10 consecutive Trading Days ending immediately before the
Change of Control (in the case of a Change of Control under clause
(ii) or (iii) above) shall equal or exceed 105% of the Conversion
Price of the Securities in effect on the date of such Change of
Control or the public announcement of such Change of Control, as
applicable, or (b) a Change of Control under clause (i), (ii) or
(iii) above shall not be deemed to have occurred if at least 90% of
the consideration in the Change of Control transaction consists of
shares of capital stock traded on a U.S. national securities exchange
or quoted on the NNM, and as a result of such transaction, the
Securities become convertible solely into such capital stock.
"Closing Date" means March 22, 1999.
"Common Stock" means the common stock of the Company as the
same exists at the date of this Indenture or as such stock may be
constituted from time to time.
"Company" means the party named as such above until a
successor replaces it in accordance with Article VII and thereafter
means the successor.
"Continuing Directors" means, as of any date of
determination, any member of the board of directors of the Company
who (i) was a member of such board of directors on the date of this
Indenture or (ii) was nominated for election or elected to such board
of directors with the approval of a majority of the Continuing
Directors who were members of such board of directors at the time of
such nomination or election.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be
principally administered, which office at the date of execution of
this Indenture is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286, Attention: Corporate Trust Trustee
Administration.
"Daily Market Price" means the price of a share of Common
Stock on the relevant date, determined (a) on the basis of the last
reported sale price regular way of the Common Stock as reported on
the Nasdaq Stock Market's National Market (the "NNM"), or if the
Common Stock is not then listed on the NNM, as reported on the
principle national securities exchange upon which the Common Stock is
listed, or (b) if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked
quotations regular way as so reported, or (c) if the Common Stock is
not listed on the NNM or on any national securities exchange, on the
basis of the average of the high bid and low asked quotations regular
way on the day in question in the over-the-counter market as reported
by the National Association of Securities Dealers Automated Quotation
System, or if not so quoted, as reported by National Quotation
Bureau, Incorporated, or a similar organization.
"Damages Payment Date" has the meaning set forth in the
Registration Agreement.
"Default" means any event that is or, with the passage of
time or the giving of notice or both, would be an Event of Default.
"Depositary" means The Depository Trust Company, its
nominees and their respective successors.
"Designated Event" means the occurrence of a Change of
Control or a Termination of Trading.
"Designated Senior Debt" means any Senior Debt which, at the
date of determination, has an aggregate principal amount outstanding
of, or commitments to lend up to, at least $15,000,000 and is
specifically designated by the Company in the instrument evidencing
or governing such Senior Debt as "Designated Senior Debt" for
purposes of this Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession of the United
States, which are in effect from time to time.
"Global Securities Legend" means the legend labeled as such
and that is set forth in Exhibit A hereto.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness; and such term, when
used as a verb, shall have correlative meaning.
"Indebtedness" means, with respect to any Person, all
Obligations, whether or not contingent, of such Person (i)(a) for
borrowed money (including, but not limited to, any indebtedness
secured by a security interest, mortgage or other lien on the assets
of such Person which is (1) given to secure all or part of the
purchase price of property subject thereto, whether given to the
vendor of such property or to another, or (2) existing on property at
the time of acquisition thereof), (b) evidenced by a note, debenture,
bond or other written instrument, (c) under a lease required to be
capitalized on the balance sheet of the lessee under GAAP or under
any lease or related document (including a purchase agreement) which
provides that such Person is contractually obligated to purchase or
to cause a third party to purchase such leased property, (d) in
respect of letters of credit, bank guarantees or bankers' acceptances
(including reimbursement obligations with respect to any of the
foregoing), (e) with respect to Indebtedness secured by a mortgage,
pledge, lien, encumbrance, charge or adverse claim affecting title or
resulting in an encumbrance to which the property or assets of such
Person are subject, whether or not the Obligation secured thereby
shall have been assumed or Guaranteed by or shall otherwise be such
Person's legal liability, (f) in respect of the balance of the
deferred and unpaid purchase price of any property or assets, and (g)
under interest rate or currency swap agreements, cap, floor and
collar agreements, spot and forward contracts and similar agreements
and arrangements; (ii) with respect to any Obligation of others of
the type described in the preceding clause (i) or under clause (iii)
below assumed by or Guaranteed in any manner by such Person or in
effect Guaranteed by such Person through an agreement to purchase
(including, without limitation, "take or pay" and similar
arrangements), contingent or otherwise (and the Obligations of such
Person under any such assumptions, Guarantees or other such
arrangements); and (iii) any and all deferrals, renewals, extensions,
refinancings and refundings of, or amendments, modifications or
supplements to, any of the foregoing.
"Indenture" means this Indenture, as amended or supplemented
from time to time by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, including
for all purposes of this Indenture any supplemental indenture and the
provisions of the TIA that are deemed to be a part of and govern this
Indenture and any supplemental indenture.
"Initial Purchasers" means Salomon Smith Barney Inc., BT
Alex. Brown Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation.
"interest payment date" means, when used with respect to the
Securities, each March 15 and September 15.
"Issuance Date" means March 22, 1999.
"Junior Securities" means securities of the Company as
reorganized or readjusted or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided for in this Indenture
with respect to the Securities, to the payment in full without
diminution or modification by such plan of all Senior Debt.
"Liquidated Damages" has the meaning specified in
paragraph 11 of the form of Security which is attached as Exhibit A
hereto.
"Material Subsidiary" means any Subsidiary of the Company
which at the date of determination is a "significant subsidiary" as
defined in Rule 1-02(w) of Regulation S-X under the Securities Act
and the Exchange Act (as such Regulation is in effect on March 22,
1999).
"maturity date" and "final maturity date" mean, when used
with respect to the Securities, March 15, 2006.
"NNM" has the meaning specified in the definition of "Daily
Market Price".
"Noteholder" or "holder" means a person in whose name a
Security is registered.
"Obligations" means any principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the offering memorandum relating
to the Securities dated March 17, 1999.
"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the Chairman of the Board, the Chief
Executive Officer, the President or the Chief Financial Officer of
the Company, and delivered to the Trustee that meets the requirements
of this Indenture.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee that meets the requirements
of Sections 12.04 and 12.05 hereof. The counsel may be an employee
of or counsel to the Company or the Trustee unless otherwise
expressly stated herein.
"Person" and "person" means any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, limited liability company or government
or any agency or political subdivision thereof.
"Registration Agreement" means the Registration Agreement
relating to the Securities and Common Stock issuable upon conversion
of such Securities dated March 22, 1999, between the Company and the
Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Debt.
"Restricted Common Stock Legend" means the legend labeled as
such and that is set forth in Exhibit D hereto.
"Restricted Definitive Securities Legend" means the legend
labeled as such and that is set forth in Exhibit A hereto.
"Restricted Global Securities Legend" means the legend
labeled as such and that is set forth in Exhibit A hereto.
"Restricted Securities Legend" means the Restricted
Definitive Securities Legend or the Restricted Global Securities
Legend or both, as the context may require.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described in the preamble
above that are issued, authenticated and delivered under this
Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Debt" means the principal of, premium, if any, on,
interest on and other amounts due on Indebtedness of the Company,
whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed or Guaranteed by the Company (including
all deferrals, renewals, extensions, refinancings and refundings of,
or amendments, modifications or supplements to, any of the
foregoing), unless, in the instrument creating or evidencing such
Indebtedness or pursuant to which such Indebtedness is outstanding,
it is expressly provided that such Indebtedness is not senior in
right of payment to, or ranks pari passu in right of payment with,
the Securities. Senior Debt includes, with respect to the
obligations described above, interest accruing, pursuant to the terms
of such Senior Debt, on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company, whether or
not post-filing interest is allowed in such proceeding, at the rate
specified in the instrument governing the relevant obligation.
Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include: (a) Indebtedness of or amounts owed by the
Company for compensation to employees, or for goods, services or
materials purchased in the ordinary course of business; (b)
Indebtedness of the Company to a Subsidiary of the Company other than
such Indebtedness that would be subject to a prior claim by the
lenders under the Company's existing credit facilities; or (c) any
liability for federal, state, local or other taxes owed or owing by
the Company.
"Shelf Registration Statement" shall have the meaning set
forth in the Registration Agreement.
"Stock Split" means the two-for-one Common Stock split in
the form of a stock dividend to be distributed by the Company to its
stockholders on or about April 2, 1999.
"Subsidiary" of a Person means any corporation, association
or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Termination of Trading" will be deemed to have occurred if
the Common Stock (or other securities into which the Securities are
then convertible) is neither listed for trading on a United States
national securities exchange nor approved for trading on the NNM or
other established automated over-the-counter trading market in the
United States.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code SS
77aaa-77bbbb) and the rules and regulations thereunder as in effect
on the date on which this Indenture is qualified under the Trust
Indenture Act of 1939 except as required by Section 11.03 hereof,
provided that if the Trust Indenture Act of 1939 or the rules and
regulations thereunder are amended after such date, "TIA" means, if
so required by such amendment, the Trust Indenture Act of 1939, as so
amended.
"Trading Day" shall mean (A) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or
another national securities exchange, a day on which the New York
Stock Exchange or such other national securities exchange is open for
business, (B) if the applicable security is quoted on the NNM, a day
on which trades may be made thereon or (C) if the applicable security
is not so listed, admitted for trading or quoted, any day other than
a Legal Holiday.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor.
"Trust Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant
vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the persons who at the time
shall be such officers, respectively, and who shall have direct
responsibility for the administration of this Indenture or to whom
any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject.
. ction 1.02. Other Definitions
Term Defined in
Section
"Agent Members"....................................................... 2.01
"Bankruptcy Law"...................................................... 8.01
"Cedel Bank".......................................................... 2.01
"Commencement Date"................................................... 3.08
"Conversion Agent".................................................... 2.03
"Conversion Date"..................................................... 5.02
"Conversion Price".................................................... 5.01
"Conversion Shares"................................................... 5.06
"Current Market Price"................................................ 5.06
"Custodian"........................................................... 8.01
"Default Rate"........................................................ 2.13
"Defaulted Interest................................................... 2.12
"Definitive Securities"............................................... 2.01
"Designated Event Offer".............................................. 4.07
"Designated Event Payment"............................................ 4.07
"Designated Event Payment Date"....................................... 3.08
"Distribution Date"................................................... 5.06
"Distribution Record Date"............................................ 5.06
"Excess Payment"...................................................... 5.06
"Euroclear"........................................................... 2.01
"Event of Default".................................................... 8.01
"Global Security"..................................................... 2.01
"Legal Holiday".......................................................12.07
"Non-Global Purchasers"............................................... 2.01
"Officer".............................................................12.10
"Paying Agent"........................................................ 2.03
"Payment Blockage Notice"............................................. 6.02
"Payment Blockage Period"............................................. 6.02
"Payment Default"..................................................... 8.01
"Purchase Agreement".................................................. 2.01
"Purchase Date"....................................................... 5.06
"QIBs"................................................................ 2.01
"Registrar"........................................................... 2.03
"Regulation S"........................................................ 2.01
"Rights".............................................................. 5.06
"Rule 144A"........................................................... 2.01
"Tender Period"....................................................... 3.08
Section 1.03. Incorporation by Reference of Trust Indenture
Act . Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Securities means the Company or any other
obligor on the Securities.
All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by
SEC rule under the TIA have the meanings so assigned to them.
. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP
consistently applied;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and
words in the plural include the singular; and
(e) provisions apply to successive events and
transactions.
ARTICLE II
THE SECURITIES
. The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A which
is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company
is subject, if any, or usage (provided that any such notation, legend
or endorsement is in a form acceptable to the Company). The Company
shall furnish any such legend not contained in Exhibit A to the
Trustee in writing. Each Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth
in Exhibit A are part of the terms of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
(a) Global Securities. The Securities are being offered and
sold by the Company pursuant to a Purchase Agreement relating to the
Securities, dated March 17, 1999, among the Company and the Initial
Purchasers (the "Purchase Agreement").
Securities offered and sold (i) in reliance on Regulation S
under the Securities Act ("Regulation S") or (ii) to "qualified
institutional buyers" as defined in Rule 144A ("QIBs") in reliance on
Rule 144A under the Securities Act ("Rule 144A"), each as provided in
the Purchase Agreement, shall be issued in the form of one or more
permanent global Securities in definitive, fully registered form
without interest coupons with the Global Securities Legend and
Restricted Global Securities Legend set forth in Exhibit A hereto
(each, a "Global Security"). Any Global Security shall be deposited
on behalf of the purchasers of the Securities represented thereby
with the Trustee, at its New York office, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee
of the Depositary for the accounts of participants in the Depositary
(and, in the case of Securities held in accordance with Regulation S,
registered with the Depositary for the accounts of designated agents
holding on behalf of the Euroclear System ("Euroclear") or, when its
procedures so permit, Cedel Bank, societe anonyme ("Cedel Bank")),
duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of a Global
Security may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or
its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to a Global Security deposited with or on behalf of the
Depositary.
The Company shall execute and the Trustee shall, in
accordance with this Section 2.01(b) and the written order of the
Company, authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of Cede & Co. or
other nominee of such Depositary and (ii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary
pursuant to a FAST Balance Certificate Agreement between the
Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to
any Global Security held on their behalf by the Depositary or by the
Trustee as the custodian of the Depositary or under such Global
Security, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute
owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary
practices of such Depositary governing the exercise of the rights of
a holder of a beneficial interest in any Global Security.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the
"Management Regulations and Instructions to Participants" of Cedel
shall be applicable to interests in any Global Securities that are
held by participants through Euroclear or Cedel. The Trustee shall
have no obligation to notify holders of any such procedures or to
monitor or enforce compliance with the same.
(c) Definitive Securities. Except as provided in Section
2.06 and 2.10, owners of beneficial interests in Global Securities
will not be entitled to receive physical delivery of certificated
Securities in definitive form. Purchasers of Securities who are not
QIBs and did not purchase Securities sold in reliance on Regulation S
under the Securities Act (referred to herein as the "Non-Global
Purchasers") will receive certificated Securities in definitive form
bearing the Restricted Definitive Securities Legend set forth in
Exhibit A hereto ("Definitive Securities"). Definitive Securities
will bear the Restricted Definitive Securities Legend set forth on
Exhibit A unless removed in accordance with Section 2.06(b).
. One Officer shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal or a facsimile
thereof shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the
Security shall nevertheless be valid.
A Security shall not be entitled to any benefits under this
Indenture or the Registration Agreement or otherwise be valid until
authenticated by the manual signature of an authorized signatory of
the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
Upon a written order of the Company signed by two Officers,
the Trustee shall authenticate the Securities for original issue up
to an aggregate principal amount of $200,000,000 (plus up to an
additional $50,000,000 aggregate principal amount which may be issued
from time to time upon exercise by the Initial Purchasers of the
over-allotment option set forth in the Purchase Agreement) and
deliver such authenticated Securities as directed in such order. The
aggregate principal amount of Securities outstanding at any time
shall not exceed such amount except as provided in Section 2.07.
The Trustee may appoint one or more authenticating agents
acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever the Trustee
may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating
agent has the same rights as an Agent to deal with the Company or an
Affiliate of the Company.
. The Company shall maintain in the Borough of Manhattan,
The City of New York, State of New York (i) an office or agency where
Securities may be presented for registration of transfer or for
exchange (the "Registrar"), (ii) an office or agency where Securities
may be presented for payment (the "Paying Agent"), (iii) an office or
agency where Securities may be presented for conversion (the
"Conversion Agent") and (iv) an office or agency where notices to or
demands upon the Company in respect of the Securities and this
Indenture may be sent. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company has
initially appointed the Trustee (at 101 Barclay Street, Floor 21
West, New York, New York 10286) as its Registrar, Paying Agent and
Conversion Agent in New York. The Company may appoint one or more
co-registrars, one or more additional paying agents and one or more
additional conversion agents in such other locations as it shall
determine. The term "Registrar" includes any co-registrar, the term
"Paying Agent" includes any additional paying agent and the term
"Conversion Agent" includes any additional conversion agent. The
Company may change any Paying Agent, Registrar or Conversion Agent
without prior notice to any Noteholder. The Company shall notify the
Trustee of the name and address of any newly-appointed Agent not a
party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar, Paying Agent or Conversion Agent, the
Trustee shall act as such.
. The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent will hold in
trust for the benefit of Noteholders or the Trustee all money held by
the Paying Agent for the payment of principal of, premium, if any,
on, interest and Liquidated Damages, if any, on, the Securities, and
will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any money disbursed by
it. Upon payment over to the Trustee, the Paying Agent (if other
than the Company or an Affiliate of the Company) shall have no
further liability for the money. If the Company or an Affiliate of
the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Noteholders all money held
by it as Paying Agent.
. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the
names and addresses of Noteholders and shall otherwise comply with
TIA S312(a). If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least seven Business Days before each
interest payment date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of
Noteholders, and the Company shall otherwise comply with TIA S312(a).
. Where Securities are presented to the Registrar with a
request to register a transfer or to exchange them for an equal
principal amount of Securities of other denominations, such Registrar
shall register the transfer or make the exchange if the requirements
set forth in this Indenture and as otherwise may be reasonably
required by the Registrar with respect to such transactions are met.
To permit registrations of transfers and exchanges, the Company shall
issue and the Trustee shall authenticate Securities at the
Registrar's request. No service charge shall be made for any
registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer tax or
similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06, 3.08, 5.02 or 11.05 hereof not involving any
transfer of the Securities).
The Company shall not be required (i) to issue, register the
transfer of, or exchange Securities during a period beginning at the
opening of business 15 days before the day of mailing of notice of
redemption of Securities under Section 3.03 hereof and ending at the
close of business on the day of such mailing, or (ii) to exchange or
register the transfer of any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being
redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so
long as a Global Security remains outstanding and is held by or on
behalf of the Depositary, transfers of a Global Security, in whole or
in part, or of any beneficial interest therein, shall only be made in
accordance with Sections 2.01(b) and 2.10 and this Section 2.06(a);
provided, however, that beneficial interests in a Global Security may
be transferred to persons who take delivery thereof in the form of a
beneficial interest in the Global Security in accordance with the
transfer restrictions set forth under the heading "Notice to
Investors" in the Offering Memorandum and, if applicable, in the
Restricted Global Securities Legend.
(i) Except for transfers or exchanges made in
accordance with any of clauses (ii) through (v) of this
Section 2.06(a) and Section 2.10, transfers of a Global
Security shall be limited to transfers of such Global
Security in whole, but not in part, to nominees of the
Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) Global Security to Definitive Security.
If an owner of a beneficial interest in a Global Security
deposited with the Depositary or with the Trustee as
custodian for the Depositary wishes at any time to transfer
its interest in such Global Security to a Person who is
required to take delivery thereof in the form of a
Definitive Security, such owner may, subject to the rules
and procedures of Euroclear or Cedel Bank, if applicable,
and the Depositary, cause the exchange of such interest for
one or more Definitive Securities of any authorized
denomination or denominations and of the same aggregate
principal amount. Upon receipt by the Registrar of (1)
instructions from Euroclear or Cedel Bank, if applicable,
and the Depositary directing the Trustee to authenticate and
deliver one or more Definitive Securities of the same
aggregate principal amount as the beneficial interest in the
Global Security to be exchanged, such instructions to
contain the name or names of the designated transferee or
transferees, the authorized denomination or denominations of
the Definitive Securities to be so issued and appropriate
delivery instructions, (2) a certificate substantially in
the form of Exhibit B attached hereto given by the owner of
such beneficial interest, (3) a certificate substantially in
the form of Exhibit C attached hereto given by the person
acquiring the Definitive Securities for which such interest
is being exchanged, to the effect set forth therein, and (4)
such other certifications or other information and, in the
case of transfers pursuant to Rule 144 under the Securities
Act, legal opinions as the Company may reasonably require to
confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then
Euroclear or Cedel Bank, if applicable, or the Registrar, as
the case may be, will instruct the Depositary to reduce or
cause to be reduced such Global Security by the aggregate
principal amount of the beneficial interest therein to be
exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial
interest in the Global Security that is being transferred,
and concurrently with such reduction and debit the Company
shall execute, and the Trustee shall authenticate and
deliver, one or more Definitive Securities of the same
aggregate principal amount in accordance with the
instructions referred to above.
(iii) Definitive Security to Definitive
Security. If a holder of a Definitive Security wishes at any
time to transfer such Definitive Security (or portion
thereof) to a Person who is required to take delivery
thereof in the form of a Definitive Security, such holder
may, subject to the restrictions on transfer set forth
herein and in such Definitive Security, cause the transfer
of such Definitive Security (or any portion thereof in a
principal amount equal to an authorized denomination) to
such transferee. Upon receipt by the Registrar of (1) such
Definitive Security, duly endorsed as provided herein, (2)
instructions from such holder directing the Trustee to
authenticate and deliver one or more Definitive Securities
of the same aggregate principal amount as the Definitive
Security (or portion thereof) to be transferred, such
instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or
denominations of the Definitive Securities to be so issued
and appropriate delivery instructions, (3) a certificate
from the holder of the Definitive Security to be transferred
in substantially the form of Exhibit B attached hereto, (4)
a certificate substantially in the form of Exhibit C
attached hereto given by the person acquiring the Definitive
Securities (or portion thereof), to the effect set forth
therein, and (5) such other certifications or other
information and, in the case of transfers pursuant to Rule
144 under the Securities Act, legal opinions as the Company
may reasonably require to confirm that such transfer is
being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act, then the Registrar, shall cancel or
cause to be canceled such Definitive Security and
concurrently therewith, the Company shall execute, and the
Trustee shall authenticate and deliver, one or more
Definitive Securities in the appropriate aggregate principal
amount, in accordance with the instructions referred to
above and, if only a portion of a Definitive Security is
transferred as aforesaid, concurrently therewith Company
shall execute and the Trustee shall execute and deliver to
the transferor a Definitive Security in a principal amount
equal to the principal amount which has not been
transferred. A holder of a Definitive Security may at any
time exchange such Definitive Security for one or more
Definitive Securities of other authorized denominations and
in the same aggregate principal amount and registered in the
same name by delivering such Definitive Security, duly
endorsed as provided herein, to the Registrar together with
instructions directing the Trustee to authenticate and
deliver one or more Definitive Securities in the same
aggregate principal amount and registered in the same name
as the Definitive Security to be exchanged, and the
Registrar thereupon shall cancel or caused to be cancelled
such Definitive Security and concurrently therewith the
Company shall execute and Trustee shall authenticate and
deliver, one or more Definitive Securities in the same
aggregate principal amount and registered in the same name
as the Definitive Security being exchanged.
(iv) Definitive Security to Global Security.
If a holder of a Definitive Security wishes at any time to
transfer such Definitive Security (or portion thereof) to a
Person who is not required to take delivery thereof in the
form of a Definitive Security, such holder shall, subject to
the restrictions on transfer set forth herein and in such
Definitive Security and the rules of the Depositary and
Euroclear and Cedel Bank, as applicable, cause the exchange
of such Definitive Security for a beneficial interest in the
Global Security. Upon receipt by the Registrar of (1) such
Definitive Security, duly endorsed as provided herein, (2)
instructions from such holder directing the Trustee to
increase the aggregate principal amount of the Global
Security deposited with the Depository or with the Trustee
as custodian for the Depository by the same aggregate
principal amount at maturity as the Definitive Security to
be exchanged, such instructions to contain the name or names
of a member of, or participant in, the Depository that is
designated as the transferee, the account of such member or
participant and other appropriate delivery instructions, (3)
the assignment form on the back of the Definitive Security
completed in full (certifying in effect that such transfer
complies with Rule 144A or Regulation S under the Securities
Act or is otherwise being made to a Person who is not
required to take delivery of such Security in the form of a
Definitive Security) and (4) such other certifications or
other information and, in the case of transfers pursuant to
Rule 144 under the Securities Act, legal opinions as the
Company may reasonably require to confirm that such transfer
is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act, then the Registrar, shall cancel or
cause to be canceled such Definitive Security and
concurrently therewith shall increase the aggregate
principal amount of the Global Security by the same
aggregate principal amount as the Definitive Security
canceled.
(v) Other Exchanges. In the event that a
Global Security is exchanged for Securities in definitive
registered form pursuant to Section 2.10, prior to the
effectiveness of a Shelf Registration Statement with respect
to such Securities, such Securities may be exchanged only in
accordance with such procedures as are substantially
consistent with the provisions of clauses (ii) and (iii)
above (including the certification requirements intended to
ensure that such transfers comply with Rule 144A or
Regulation S under the Securities Act, as the case may be)
and such other procedures as may from time to time be
adopted by the Company.
(b) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration
Agreement, if Securities are issued upon the registration of
transfer, exchange or replacement of Securities bearing a Restricted
Securities Legend, or if a request is made to remove such a
Definitive Securities Legend on Securities, the Securities so issued
shall bear the Restricted Securities Legend, or a Restricted
Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Company such satisfactory evidence, which,
in the case of a transfer made pursuant to Rule 144 under the
Securities Act, may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required
by the Company, that neither the legend nor the restrictions on
transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or that such Securities are not
"restricted" within the meaning of Rule 144 under the Securities
Act. Upon provision to the Company of such satisfactory evidence,
the Trustee, at the written direction of the Company, shall
authenticate and deliver Securities that do not bear the legend. The
Company shall not otherwise be entitled to require the delivery of a
legal opinion in connection with any transfer or exchange of
Securities.
(c) Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.
(d) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including
any transfers between or among Depositary's participants or
beneficial owners of interests in any Global Security) other than to
require delivery of such certificates and other documentation as is
expressly required by, and to do so if and when expressly required
by, the terms of this Indenture and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
. If the holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken or if such Security is
mutilated and is surrendered to the Registrar, the Company shall
issue and the Trustee shall authenticate a replacement Security if
the Trustee's and the Company's requirements (as shall have been
previously communicated to the Trustee in a written letter of
standing instruction) are met. An indemnity bond must be sufficient
in the judgment of each of the foregoing to protect the Company, the
Trustee, any Agent or any authenticating agent from any loss which
any of them may suffer if a Security is replaced. The Company may
charge for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, or is
about to be redeemed or purchased by the Company pursuant to Article
III hereof or converted into shares of Common Stock pursuant to
Article V hereof, the Company in its discretion may, instead of
issuing a new Security, pay, redeem or convert such Security, as the
case may be.
Every replacement Security is an additional obligation of
the Company and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Securities duly
issued hereunder. The provisions of this Section 2.07 are exclusive
and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement of mutilated, destroyed,
lost or stolen Securities.
. The Securities outstanding at any time are all the
Securities authenticated by the Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Security is replaced, paid, redeemed or converted, it
ceases to be outstanding unless, in the case of a replaced Security,
the Trustee receives proof satisfactory to it that the replaced
Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01 hereof,
they cease to be outstanding and interest (and Liquidated Damages, if
any) on them ceases to accrue.
Except as set forth in Section 2.09 hereof, a Security does
not cease to be outstanding because the Company or an Affiliate of
the Company holds the Security.
. In determining whether the Noteholders of the required
principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or an Affiliate of
the Company shall be considered as though they are not outstanding,
except that for the purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent,
only Securities which a Trust Officer actually knows are so owned
shall be so disregarded.
Section 2.10. Temporary Securities; Exchange of Global
Security . r Definitive Securities
(a) Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities and shall be
reasonably acceptable to the Trustee. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities.
(b) Except for transfers made in accordance with Section
2.06 (a), a Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.01
shall be transferred to the beneficial owners thereof in the form of
certificated Securities in definitive form only if such transfer
complies with Section 2.06 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for
such Global Security or if at any time such Depositary ceases to be a
"clearing agency" registered under the Exchange Act and a successor
Depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Security or interest thereon that is
transferable to the beneficial owners thereof in the form of
certificated Securities in definitive form shall, if held by the
Depository, be surrendered by the Depositary to the Trustee, without
charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate
principal amount of Securities of authorized denominations in the
form of certificated Securities in definitive form. Any portion of a
Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000
and any integral multiple thereof and registered in such names as the
Depositary shall direct. Any Securities in the form of certificated
Securities in definitive form delivered in exchange for an interest
in the Global Security shall, except as otherwise provided by Section
2.06(b), bear the Restricted Definitive Securities Legend set forth
in Exhibit A hereto.
(d) Prior to any transfer pursuant to Section 2.10(b), the
registered holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action
which a holder is entitled to take under this Indenture or the
Securities.
(e) The Company will make available to the Trustee a
reasonable supply of certificated Securities in definitive form
without interest coupons.
. The Company at any time may deliver Securities to the
Registrar for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, redemption,
conversion, exchange or payment. The Trustee shall promptly cancel
all Securities surrendered for registration of transfer, redemption,
conversion, exchange, payment, replacement or cancellation and shall
dispose of all such canceled Securities in accordance with its
customary procedures. The Company may not issue new Securities to
replace Securities that it has paid or that have been delivered to
the Registrar for cancellation or that any holder has converted.
All Securities which are redeemed, purchased or otherwise
acquired by the Company or any of its Subsidiaries or Affiliates
prior to the final maturity date of the Securities shall be delivered
to the Trustee for cancellation and the Company may not hold or
resell any such Securities or issue any new Securities to replace any
such Securities or any Securities that any holder has converted
pursuant to this Indenture.
. Interest (including Liquidated Damages, if any) on any ved
Security which is payable, and is punctually paid or duly provided
for on any March 15 or September 15 shall be paid to the Person in
whose name such Security (or one or more predecessor Securities) is
registered at the close of business on the record date for such
interest payment, which shall be the February 15 or August 15
(whether or not a Business Day) immediately preceding such interest
payment date.
Any interest and Liquidated Damages, if any, on any Security
which is payable, but is not punctually paid or duly provided for, on
any interest payment date (herein collectively called "Defaulted
Interest") shall forthwith cease to be payable to the registered
holder on the relevant record date, and, except as hereinafter
provided, such Defaulted Interest and any interest payable on such
Defaulted Interest may be paid by the Company, at its election, as
provided in subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest, and any interest payable on such
Defaulted Interest, to the Persons in whose names the
Securities are registered at the close of business on a
special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on the Securities and
the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect
of such Defaulted Interest (including Liquidated Damages, if
any) or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest
as provided in this subsection (a). Thereupon, the Trustee
shall fix a special record date for the payment of such
Defaulted Interest which shall be not more than 15 calendar
days and not less than 10 calendar days prior to the date of
the proposed payment and not less than 10 calendar days
after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the
Company of such special record date and, in the name and at
the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the special
record date therefor to be sent, first class mail, postage
prepaid, to each holder at such holder's address as it
appears in the register for the Securities, not less than 10
calendar days prior to such special record date. Notice of
the proposed payment of such Defaulted Interest and the
special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the
Persons in whose names the Securities are registered at the
close of business on such special record date and shall no
longer be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted
Interest and any interest payable on such Defaulted
Interest, on the Securities in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12,
each Security delivered under this Indenture upon registration of
transfer of, or in exchange for, or in lieu of, or in substitution
for, any other Security, shall carry the rights to interest (and
Liquidated Damages, if any) accrued and unpaid, and to accrue, which
were carried by such other Security.
. Interest on the Securities shall be computed on the basis
of a 360-day year consisting of twelve 30-day months. In the event
that any principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Securities is not paid when due, then except
to the extent permitted by law, such overdue principal, premium, if
any, interest and Liquidated Damages, if any, shall bear interest
until paid at the Default Rate, compounded semi-annually. As used
herein, the term "Default Rate" means, as of any date and whether or
not any Securities are outstanding on such date, a rate per annum
equal to (i) 5% per annum plus (ii) if a Registration Default (as
defined in the Registration Agreement) has occurred and is continuing
on such date, the per annum rate of interest at which Liquidated
Damages on the Securities are being computed on such date or, if no
Securities are outstanding on such date, the per annum rate of
interest at which Liquidated Damages on the Securities would have
been computed on such date if the Securities were outstanding.
. The Company in issuing the Securities may use a "CUSIP"
number in notices of redemption or exchange as a convenience to
holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities and that reliance
may be placed only on the other identification numbers printed on the
Securities. The Company shall promptly notify the Trustee of any
change in the CUSIP number.
. The Company agrees that it will refuse to register any
transfer of Securities or any shares of Common Stock issued upon
conversion of Securities that is not made in accordance with the
provisions of Regulation S under the Securities Act, pursuant to a
registration statement which has been declared effective under the
Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act; provided that the
provisions of this paragraph shall not be applicable to any
Securities which do not bear a Restricted Securities Legend or to any
shares of Common Stock evidenced by certificates which do not bear a
Restricted Common Stock Legend.
. Prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any Agent of the Company
may treat the Person in whose name such Security is registered as the
owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and (subject to Sections 2.06 and
2.13 above) interest and Liquidated Damages, if any, on such Security
and for all other purposes whatsoever, whether or not such Security
be overdue, and neither the Company, the Trustee nor any Agent shall
be affected by notice to the contrary.
ARTICLE III
REDEMPTION
. If the Company elects to redeem Securities pursuant to
Section 3.07 hereof, it shall notify the Trustee in writing of the
redemption date and the principal amount of Securities to be
redeemed. The Company shall give each notice provided for in this
Section 3.01 at least 45 days before the redemption date (unless a
shorter notice period shall be satisfactory to the Trustee).
. If less than all the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed by a method that
complies with the requirements of the principal national securities
exchange, if any, on which the Securities are listed, or, if the
Securities are not so listed, on a pro rata basis, by lot or by such
other method as the Trustee considers fair and appropriate; provided,
however, that no Securities of $1,000 in principal amount or less
shall be redeemed in part. The Trustee shall make the selection not
more than 60 days and not less than 30 days before the redemption
date from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000.
Securities and portions of them it selects shall be in principal
amounts of $1,000 or integral multiples of $1,000. Provisions of
this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee
shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
If any Security selected for partial redemption is converted
in part after such selection, the converted portion of such Security
shall be deemed (so far as may be) to be the portion to be selected
for redemption. The Securities (or portions thereof) so selected
shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Security is converted in whole or in
part before the mailing of the notice of redemption. Upon any
redemption of less than all the Securities, the Company and the
Trustee may treat as outstanding any Securities surrendered for
conversion during the period 15 days next preceding the mailing of a
notice of redemption and need not treat as outstanding any Security
authenticated and delivered during such period in exchange for the
unconverted portion of any Security converted in part during such
period.
. At least 30 days but not more than 60 days before a
redemption date, the Company shall mail a notice of redemption to
each holder whose Securities are to be redeemed at such holder's
registered address.
The notice shall identify the Securities to be redeemed
(including the CUSIP number) and shall state:
(a) the redemption date;
(b) the redemption price and the amount accrued and
unpaid interest and Liquidated Damages, if any, to be paid;
(c) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be
redeemed and that, after the redemption date, upon
cancellation of such Security, a new Security or Securities
in principal amount equal to the unredeemed portion will be
issued in the name of the holder thereof;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price plus accrued interest and Liquidated Damages, if any;
(f) that, unless the Company defaults in making
such redemption payment or the Paying Agent is prohibited
from making such payment pursuant to the terms of this
Indenture, by law or otherwise, interest and Liquidated
Damages, if applicable, on Securities called for redemption
cease to accrue on and after the redemption date;
(g) the paragraph of the Securities pursuant to
which the Securities called for redemption are being
redeemed; and
(h) any other information necessary to enable
holders to comply with the notice of redemption.
Such notice shall also state the current Conversion Price
and the date on which the right to convert such Securities or
portions thereof into Common Stock of the Company will expire.
At the Company's request, the Trustee shall give notice of
redemption in the Company's name and at the Company's expense. In
such event, the Company shall provide the Trustee with the
information required by this Section 3.03 in a timely manner;
provided that the Company shall give the Trustee not less than 60
days' written notice unless the Trustee consents to a shorter period.
. Once notice of redemption is mailed, Securities called
for redemption become due and payable on the redemption date at the
price set forth in the Security plus interest and Liquidated Damages,
if any, accrued and unpaid to the redemption date; provided that
accrued interest and Liquidated Damages which are due and payable on
any interest payment date which is on or prior to the redemption date
shall be payable to the holders of such Securities, or one or more
predecessor Securities, registered as such at the close of business
on the relevant record date; and provided, further, that if a
redemption date is not a Business Day, payment shall be made on that
next succeeding Business Day and no interest shall accrue for the
period from such redemption date to such succeeding Business Day
unless the Company shall default in the payment due on such Business
Day. Upon surrender to the Paying Agent, such Securities shall be
paid at the redemption price stated in such notice. Failure to give
notice or any defect in the notice to any holder shall not affect the
validity of the notice to any other holder.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given. In any case, failure to
give such notice to any holder or any defect in the notice to any
holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the
redemption of any other Securities.
. Prior to 10:00 A.M. (New York City time) on the
redemption date, the Company shall deposit with the Trustee or the
Paying Agent in immediately available funds, money sufficient to pay
the redemption price of and accrued and unpaid interest and
Liquidated Damages, if applicable, to but not including the
redemption date on all Securities to be redeemed on that date
(subject to the right of holders of record on the relevant record
date to receive interest (and Liquidated Damages, if applicable) due
on an interest payment date) unless theretofore converted into Common
Stock pursuant to the provisions hereof. The Trustee or such Paying
Agent shall return to the Company any money not required for that
purpose.
So long as the Company complies with the preceding paragraph
and the other provisions of this Article III and unless the Paying
Agent is prohibited from making such payment pursuant to the terms of
this Indenture, by law or otherwise, interest (and Liquidated
Damages, if any) on the Securities to be redeemed on the applicable
redemption date shall cease to accrue from and after such redemption
date and such Securities or portions thereof shall be deemed not to
be entitled to any benefit under this Indenture except to receive
payment on the redemption date of the redemption price plus interest
and Liquidated Damages, if any, accrued and unpaid to the redemption
date. If any Security called for redemption shall not be so paid
upon surrender for redemption, then, from the redemption date until
such redemption price (including, without limitation, accrued
interest and Liquidated Damages, if any) is paid in full, the Company
shall pay interest, to the extent permitted by law, on the unpaid
principal of and premium, if any, interest and Liquidated Damages, if
any, on such Security at the Default Rate, compounded semiannually.
. Upon surrender of a Security that is redeemed in part,
the Company shall issue and the Trustee shall authenticate for the
holder at the expense of the Company a new Security equal in
principal amount to the unredeemed portion of the Security
surrendered.
. The Company may redeem all or any portion of the
Securities, upon the terms and at the redemption prices set forth in
each of the Securities. Any redemption pursuant to this Section 3.07
shall be made pursuant to the provisions of Section 3.01 through 3.06
hereof.
. tion 3.08. Designated Event Offer
(a) In the event that, pursuant to Section 4.07 hereof, the
Company shall commence a Designated Event Offer, the Company shall
follow the procedures in this Section 3.08.
(b) The Designated Event Offer shall remain open for a
period specified by the Company which shall be no less than 30 days
and no more than 60 days from and including the date of the mailing
of notice in accordance with Section 3.08(d) hereof (the
"Commencement Date"), except to the extent that a longer period is
required by applicable law (the "Tender Period"). On the day (the
"Designated Event Payment Date") immediately following the last day
of the Tender Period, the Company shall purchase the principal amount
of Securities duly surrendered for repurchase and not withdrawn.
(c) If a Designated Event Payment Date is after a record
date and before the related interest payment date, accrued interest
and Liquidated Damages, if any, to the related interest payment date
will be paid to the persons in whose names the Securities (or one or
more predecessor Securities) are registered at the close of business
on such record date, notwithstanding the repurchase of any such
Securities on such Designated Event Payment Date, and no additional
interest or Liquidated Damages, if any, will be payable to
Noteholders who tender Securities for purchase on such Designated
Event Payment Date.
(d) The Company shall provide the Trustee with written
notice of the Designated Event Offer at least 10 Business Days before
the Commencement Date.
(e) Within 30 days following any Designated Event, unless
the Company is entitled to and has previously elected to redeem all
of the outstanding Securities at its option and has previously given
holders notice of its intention to redeem all of the outstanding
Securities in accordance with Article III of this Indenture, the
Company or the Trustee (at the request and expense of the Company)
shall send, by first class mail, a notice to each of the Noteholders,
which shall govern the terms of the Designated Event Offer and shall
state:
(i) that the Designated Event Offer is being
made pursuant to this Section 3.08 and Section 4.07 hereof
and that all Securities validly tendered will be accepted
for payment;
(ii) the purchase price (as determined in
accordance with Section 4.07 hereof , subject to Section
3.08(c) hereof), the length of time the Designated Event
Offer will remain open and the Designated Event Payment Date;
(iii) that any Security or portion thereof not
validly tendered or accepted for payment will continue to
accrue interest and Liquidated Damages, if applicable, and
will continue to have conversion rights;
(iv) that, unless the Company defaults in the
payment of the Designated Event Payment, any Security or
portion thereof accepted for payment pursuant to the
Designated Event Offer shall cease to accrue interest and
Liquidated Damages, if applicable, from and after the
Designated Event Payment Date and will cease to have
conversion rights after the Designated Event Payment Date;
(v) that Noteholders electing to have a
Security or portion thereof purchased pursuant to any
Designated Event Offer will be required to surrender the
Security, with the form entitled "Option of Noteholder To
Elect Purchase" on the reverse of the Security completed, to
a Paying Agent at the address specified in the notice (which
shall include and address in the Borough of Manhattan, The
City of New York) prior to the close of business on the
third Business Day preceding the Designated Event Payment
Date;
(vi) that Noteholders will be entitled to
withdraw their election if a Paying Agent receives, not
later than the close of business on the second Business Day
preceding the Designated Event Payment Date, a letter or
facsimile transmission setting forth the name of the
Noteholder, the principal amount of the Securities or
portion thereof delivered for purchase and a statement that
such Noteholder is withdrawing his election to have such
Securities or portions thereof purchased; and
(vii) that Noteholders whose Securities are
being purchased only in part will be issued new Securities
equal in principal amount to the unpurchased portion of the
Securities surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple
thereof.
In addition, the notice shall contain all instructions,
other information and materials that the Company shall reasonably
deem necessary to enable such Noteholders to tender Securities
pursuant to the Designated Event Offer or to withdraw tendered
Securities. If the Company is not required to mail such notice
because, as provided above, it has previously given notice of its
intention to redeem the Securities in whole but the Company
thereafter defaults in the payment of the redemption price (including
accrued interest and Liquidated Damages, if any) on any of the
Securities on the relevant redemption date, then the Company shall be
required to give notice pursuant to this Section 3.08(e) no later
than the second Business Day following such redemption date, in which
case the Tender Period shall be 30 days except to the extent that a
longer period is required by applicable law. In the event that the
Company is required by applicable law to extend the Tender Period
beyond the Designated Event Payment Date set forth in such notice,
the Company will, as promptly as possible, issue a press release and
send notice to holders announcing such extension and the new
Designated Event Payment Date, which press release and notice shall
state the new deadlines for surrendering and withdrawing Securities.
(f) Prior to 10:00 A.M. (New York City Time) on the
Designated Event Payment Date, the Company shall irrevocably deposit
with the Trustee or the Paying Agent in immediately available funds
an amount equal to the Designated Event Payment in respect of all
Securities or portions thereof validly tendered and not withdrawn,
such funds to be held for payment in accordance with the terms of
this Section 3.08. On the Designated Event Payment Date, the Company
shall, to the extent lawful, (i) accept for payment the Securities or
portions thereof validly tendered pursuant to the Designated Event
Offer, (ii) deliver or cause to be delivered to the Trustee the
Securities so accepted and (iii) deliver to the Trustee an Officers'
Certificate identifying the Securities or portions thereof tendered
and not withdrawn to the Company and stating that such Securities
have been accepted for payment by the Company in accordance with the
terms of this Section 3.08. The Paying Agent shall promptly (but in
any case not later than five calendar days after the Designated Event
Payment Date) mail or deliver to each holder of Notes so accepted for
payment an amount equal to the Designated Event Payment for such
Securities, and the Trustee shall promptly authenticate and mail or
otherwise deliver to each such Noteholder a new Security equal in
principal amount to any unpurchased portion of the Security
surrendered; provided that each new Security shall be in a principal
amount of $1,000 or an integral multiple thereof. Any Securities not
so accepted shall be promptly mailed or otherwise delivered by or on
behalf of the Company to the holders thereof. The Company will
publicly announce the results of the Designated Event Offer on, or as
soon as practicable after, the Designated Event Payment Date.
(g) The Designated Event Offer shall be made by the Company
in compliance with all applicable provisions of the Exchange Act and
any other securities laws and regulations (including, without
limitation, Rules 13e-4 and 14e-1 under the Exchange Act) to the
extent such laws and regulations are applicable in connection with
the repurchase of the Securities in connection with a Designated
Event.
. The Company is not required to make mandatory redemption
or sinking fund payments with respect to the Securities.
ARTICLE IV
COVENANTS
. The Company shall pay the principal of, premium, if any,
and interest (and Liquidated Damages, if applicable) on the
Securities on the dates and in the manner provided in the Securities
and this Indenture. Principal, premium, if any, and interest (and
Liquidated Damages, if applicable) shall be considered paid on the
date due if the Paying Agent (other than the Company or an Affiliate
of the Company) holds on that date money designated for and
sufficient to pay all principal, premium, if any and interest (and
Liquidated Damages, if any) then due and such Paying Agent is not
prohibited from paying such money to the Noteholders on that date
pursuant to the terms of this Indenture. To the extent lawful, the
Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of
interest (and on overdue principal, premium, if any, and Liquidated
Damages, if applicable (in each case without regard to any applicable
grace period)), at the Default Rate, compounded semiannually.
. The Company will comply with the requirements of TIA
Section 314(a). In addition, whether or not required by the rules
and regulations of the SEC, so long as any Securities are
outstanding, the Company will file with the SEC and furnish (without
exhibits) to the Trustee and to the holders of Securities all
quarterly and annual financial information required to be contained
in a filing with the SEC on Forms 10-Q and 10-K, including a
"Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and, with respect to annual consolidated
financial statements only, a report on the annual consolidated
financial statements by the Company's certified independent
accountants. The Company shall not be required to file any report or
other information with the SEC if the SEC does not permit such
filing. Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt
thereof shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Company's compliance with any of its covenants
hereunder.
In addition, if the Company at any time is not subject to
either Section 13 or 15(d) of the Exchange Act, the Company will
provide to each holder and beneficial owner of Securities and shares
of Common Stock issued upon conversion of Securities, and to any
prospective purchaser designated by any such holder or beneficial
owner, upon request, the information required pursuant to
Rule 144A(d)(4) of the Securities Act.
. The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, an Officers'
Certificate stating that a review of the activities of the Company
and its subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and
conditions contained in, this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of such
Officer's knowledge the Company has kept, observed, performed and
fulfilled each and every covenant, and complied with the covenants
and conditions contained in this Indenture and is not in default in
the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which
such Officer may have knowledge) and that to the best of such
Officer's knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of, or premium,
if any, interest or Liquidated Damages, if any, on, the Securities
are prohibited.
One of the Officers signing such Officers' Certificate shall
be either the Company's principal executive officer, principal
financial officer or principal accounting officer.
The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon, but in any event
within five Business Days after, becoming aware of:
(a) any Default, Event of Default or default in the
performance of any covenant, agreement or condition
contained in this Indenture; or
(b) any default under any other mortgage, indenture
or instrument of the nature described in Section 8.01(e),
an Officers' Certificate specifying such Default, Event of Default or
default and what action the Company is taking or proposing to take
with respect thereto.
Immediately upon the occurrence of any event giving rise to
an obligation of the Company to pay Liquidated Damages with respect
to the Securities in accordance with paragraph 11 of the form thereof
and the Registration Agreement or the termination of any such
obligation, the Company shall give the Trustee notice of such
commencement or termination, of the obligation to pay Liquidated
Damages with regard to the Securities and the amount thereof and of
the event giving rise to such commencement or termination (such
notice to be contained in an Officers' Certificate), and prior to
receipt of such Officers' Certificate the Trustee shall be entitled
to assume that no such commencement or termination has occurred, as
the case may be.
. The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power
as though no such law has been enacted.
. Except as provided in Article VII hereof, the Company
will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate,
partnership or other existence of each Subsidiary of the Company in
accordance with the respective organizational documents of the
Company and each Subsidiary and the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve
any such right, license or franchise, or the corporate, partnership
or other existence of any Subsidiary, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries taken as
a whole and that the loss thereof is not adverse in any material
respect to the Noteholders.
. The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all taxes, assessments and
governmental levies, except such as are contested in good faith and
by appropriate proceedings and for which adequate reserves in
accordance with GAAP or other appropriate provisions have been made.
. Upon the occurrence of a Designated Event, each holder of
Securities shall have the right, in accordance with this Section 4.07
and Section 3.08 hereof, to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such
holder's Securities pursuant to the terms of an offer made as
provided in Section 3.08 (the "Designated Event Offer") at a purchase
price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the
Designated Event Payment Date (the "Designated Event Payment").
. As long as any Securities are outstanding, the Company
will conduct its business and operations so as not to become an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and will take all
steps required in order for it to continue not to be an "investment
company" and not to be required to be registered under the Investment
Company Act, including, if necessary, redeployment of the assets of
the Company.
ARTICLE V
CONVERSION
. A holder of any Security may convert the principal amount
thereof (or any portion thereof that is an integral multiple of
$1,000) into fully paid and nonassessable shares of Common Stock of
the Company at any time after 90 days following the Issuance Date and
prior to the close of business on the Business Day immediately
preceding the final maturity date of the Security at the Conversion
Price then in effect, except that, with respect to any Security
called for redemption, such conversion right shall terminate at the
close of business on the Business Day immediately preceding the
redemption date (unless the Company shall default in making the
redemption payment when it becomes due, in which case the conversion
right shall terminate at the close of business on the date on which
such default is cured). The number of shares of Common Stock
issuable upon conversion of a Security is determined by dividing the
principal amount of the Security converted by the Conversion Price in
effect on the Conversion Date.
"Conversion Price" means $165.00, as the same may be
adjusted from time to time as provided in this Article V; provided
that, for purposes of clarity, it is hereby understood and agreed
that, upon the occurrence of the Stock Split (which it is currently
contemplated will occur on April 2, 1999), the Conversion Price will,
pursuant to Section 5.06(a) hereof, automatically be adjusted to
$82.50 per share.
Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of it. A holder
of Securities is not entitled to any rights of a holder of Common
Stock until such holder of Securities has converted such Securities
into Common Stock, and only to the extent that such Securities are
deemed to have been converted into Common Stock under this Article V.
. To convert a Security, a holder must satisfy the
requirements in paragraph 10 of the Securities. The date on which
the holder satisfies all of those requirements is the conversion date
(the "Conversion Date"). As promptly as practicable on or after the
Conversion Date, the Company shall issue and deliver to the Trustee a
certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion and a check or other payment for
any fractional share in an amount determined pursuant to Section
5.03. Such certificate or certificates will be sent by the Trustee
to the Conversion Agent for delivery to the holder. The Person in
whose name the certificate is registered shall become the stockholder
of record on the Conversion Date and, as of such date, such Person's
rights as a Noteholder with respect to the converted Security shall
cease; provided, however, that, except as otherwise provided in this
Section 5.02, no surrender of a Security on any date when the stock
transfer books of the Company shall be closed shall be effective to
constitute the Person entitled to receive the shares of Common Stock
upon such conversion as the stockholder of record of such shares of
Common Stock on such date, but such surrender shall be effective to
constitute the Person entitled to receive such shares of Common Stock
as the stockholder of record thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer
books are open; provided, further, however, that such conversion
shall be at the Conversion Price in effect on the date that such
Security shall have been surrendered for conversion, as if the stock
transfer books of the Company had not been closed.
No payment or adjustment will be made for accrued and unpaid
interest or Liquidated Damages on a converted Security or for
dividends or distributions on, or Liquidated Damages, if any,
attributable to, shares of Common Stock issued upon conversion of a
Security, except that, if any holder surrenders a Security for
conversion after the close of business on any record date for the
payment of an installment of interest and prior to the opening of
business on the next succeeding interest payment date, then,
notwithstanding such conversion, accrued and unpaid interest and
Liquidated Damages, if applicable, payable on such Security on such
interest payment date shall be paid on such interest payment date to
the person who was the holder of such Security (or one or more
predecessor Securities) at the close of business on such record
date. In the case of any Security surrendered for conversion after
the close of business on a record date for the payment of an
installment of interest and prior to the opening of business on the
next succeeding interest payment date, then, unless such Security has
been called for redemption on a redemption date or is to be
repurchased on a Designated Event Payment Date after such record date
and prior to such interest payment date, such Security, when
surrendered for conversion, must be accompanied by payment in an
amount equal to the interest and Liquidated Damages, if applicable,
payable on such interest payment date on the principal amount of such
Security so converted. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to
holders of Common Stock as of any record time before the close of
business on the Conversion Date.
If a holder converts more than one Security at the same
time, the number of whole shares of Common Stock issuable upon the
conversion shall be based on the total principal amount of Securities
converted.
Upon surrender of a Security that is converted in part, the
Trustee shall authenticate for the holder a new Security equal in
principal amount to the unconverted portion of the Security
surrendered.
. The Company will not issue fractional shares of Common
Stock upon conversion of a Security. In lieu thereof, the Company
will pay an amount in cash based upon the Daily Market Price of the
Common Stock on the Trading Day prior to the Conversion Date.
. The issuance of certificates for shares of Common Stock
upon the conversion of any Security shall be made without charge to
the converting Noteholder for such certificates or for any tax in
respect of the issuance of such certificates, and such certificates
shall be issued in the respective names of, or in such names as may
be directed by, the holder or holders of the converted Security;
provided, however, that in the event that certificates for shares of
Common Stock are to be issued in a name other than the name of the
holder of the Security converted, such Security, when surrendered for
conversion, shall be accompanied by an instrument of assignment or
transfer, in form satisfactory to the Company, duly executed by the
registered holder thereof or his duly authorized attorney; and
provided, further, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other
than that of the holder of the converted Security, and the Company
shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid or is not applicable.
. The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of issuance upon
conversion of Securities as herein provided, a sufficient number of
shares of Common Stock to permit the conversion of all outstanding
Securities for shares of Common Stock.
All shares of Common Stock which may be issued upon
conversion of the Securities shall be duly authorized, validly
issued, fully paid and nonassessable when so issued. The Company
shall take such action from time to time as shall be necessary so
that par value of the Common Stock shall at all times be equal to or
less than the Conversion Price then in effect.
The Company shall from time to time take all action
necessary so that the Common Stock which may be issued upon
conversion of Securities, immediately upon their issuance (or, if
such Common Stock is subject to restrictions on transfer under the
Securities Act, upon their resale pursuant to an effective Shelf
Registration Statement or in a transaction pursuant to which the
certificate evidencing such Common Stock shall no longer bear the
Restricted Common Stock Legend), will be listed on the principal
securities exchanges, interdealer quotation systems (including the
NNM) and markets, if any, on which other shares of Common Stock of
the Company are then listed or quoted.
. The Conversion Price shall be subject to adjustment from
time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares
of Common Stock to holders of Common Stock, (2) make a distribution
in shares of Common Stock to holders of Common Stock, (3) subdivide
its outstanding shares of Common Stock into a greater number of
shares of Common Stock or (4) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any Security thereafter surrendered
for conversion shall be entitled to receive the number of shares of
Common Stock which he would have owned immediately following such
action had such Securities been converted immediately prior thereto.
Any adjustment made pursuant to this subsection (a) shall become
effective immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to
all holders of Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into
Common Stock) at a price per share (or having a conversion price per
share) less than the Current Market Price per share (as determined
pursuant to subsection (f) below) of the Common Stock on the record
date for determining the holders of the Common Stock entitled to
receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to such
record date by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding as of the close of business on
such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common
Stock so offered for subscription or purchase (or the aggregate
conversion price of the convertible securities so offered) would
purchase at such Current Market Price, and of which the denominator
shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock so
offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustments shall
become effective immediately after such record date. For the
purposes of this subsection (b), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury
of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of such Common
Stock. The Company shall not issue any rights, options or warrants
in respect of shares of Common Stock held in the treasury of the
Company.
(c) In case the Company shall distribute to all holders of
Common Stock shares of Capital Stock of the Company (other than
Common Stock), evidences of indebtedness, cash, rights or warrants
entitling the holders thereof to subscribe for or purchase securities
(other than rights or warrants described in subsection (b) above) or
other assets (including securities of Persons other than the Company
but excluding (i) dividends or distributions paid exclusively in
cash, (ii) dividends and distributions described in subsection (b)
above and (iii) distributions in connection with the consolidation,
merger or transfer of assets covered by Section 5.13), then in each
such case the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price
in effect immediately prior to the date of such distribution by a
fraction of which the numerator shall be the Current Market Price
(determined as provided in subsection (f) below) of the Common Stock
on the record date mentioned below less the fair market value on such
record date (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market value
and described in a Board Resolution delivered to the Trustee) of the
portion of the evidences of indebtedness, shares of Capital Stock,
cash, rights, warrants or other assets so distributed applicable to
one share of Common Stock (determined on the basis of the number of
shares of the Common Stock outstanding on the record date), and of
which the denominator shall be such Current Market Price of the
Common Stock. Such adjustment shall become effective immediately
after the record date for the determination of the holders of Common
Stock entitled to receive such distribution. Notwithstanding the
foregoing, in case the Company shall distribute rights or warrants to
subscribe for additional shares of the Company's Capital Stock (other
than rights or warrants referred to in subsection (b) above)
("Rights") to all holders of Common Stock, the Company may, in lieu
of making any adjustment pursuant to the foregoing provisions of this
Section 5.06(c), make proper provision so that each holder of a
Security who converts such Security (or any portion thereof) after
the record date for such distribution and prior to the expiration or
redemption of the Rights shall be entitled to receive upon such
conversion, in addition to the shares of Common Stock issuable upon
such conversion (the "Conversion Shares"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to
the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"), the
same number of Rights to which a holder of a number of shares of
Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and
provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares of Common Stock into
which the principal amount of the Security so converted was
convertible immediately prior to the Distribution Date would have
been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights.
(d) In case the Company shall, by dividend or otherwise, at
any time make a distribution to all holders of its Common Stock
exclusively in cash (including any distributions of cash out of
current or retained earnings of the Company but excluding any cash
that is distributed as part of a distribution requiring a Conversion
Price adjustment pursuant to paragraph (c) of this Section) in an
aggregate amount that, together with the sum of (x) the aggregate
amount of any other distributions made exclusively in cash to all
holders of Common Stock within the 12 months preceding the date fixed
for determining the stockholders entitled to such distribution (the
"Distribution Record Date") and in respect of which no Conversion
Price adjustment pursuant to paragraph (c) or (e) of this Section or
this paragraph (d) has been made plus (y) the aggregate amount of all
Excess Payments in respect of any tender offers or other negotiated
transactions by the Company or any of its Subsidiaries for Common
Stock concluded within the 12 months preceding the Distribution
Record Date and in respect of which no Conversion Price adjustment
pursuant to paragraphs (c) or (e) of this Section or this paragraph
(d) has been made, exceeds 12.5% of the product of the Current Market
Price per share (determined as provided in paragraph (f) of this
Section) of the Common Stock on the Distribution Record Date
multiplied by the number of shares of Common Stock outstanding on the
Distribution Record Date (excluding shares held in the treasury of
the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price
in effect immediately prior to the effectiveness of the Conversion
Price reduction contemplated by this paragraph (d) by a fraction of
which the numerator shall be the Current Market Price per share
(determined as provided in paragraph (f) of this Section) of the
Common Stock on the Distribution Record Date less the sum of the
aggregate amount of cash and the aggregate Excess Payments so
distributed, paid or payable within such 12 month period (including,
without limitation, the distribution in respect of which such
adjustment is being made) applicable to one share of Common Stock
(which shall be determined by dividing the sum of the aggregate
amount of cash and the aggregate Excess Payments so distributed, paid
or payable within such 12 months (including, without limitation, the
distribution in respect of which such adjustment is being made) by
the number of shares of Common Stock outstanding on the Distribution
Record Date and the denominator shall be such Current Market Price
per share (determined as provided in paragraph (f) of this Section)
of the Common Stock on the Distribution Record Date, such reduction
to become effective immediately prior to the opening of business on
the day following the Distribution Record Date.
(e) In case a tender offer or other negotiated
transaction made by the Company or any Subsidiary of the Company for
all or any portion of the Common Stock shall be consummated, if an
Excess Payment is made in respect of such tender offer or other
negotiated transaction and the aggregate amount of such Excess
Payment, together with the sum of (x) the aggregate amount of any
distributions, by dividend or otherwise, to all holders of the Common
Stock made in cash (including any distributions of cash out of
current or retained earnings of the Company) within the 12 months
preceding the date of payment of such current negotiated transaction
consideration or expiration of such current tender offer, as the case
may be (the "Purchase Date"), and as to which no adjustment in the
Conversion Price pursuant to paragraph (c) or paragraph (d) of this
Section or this paragraph (e) has been made plus (y) the aggregate
amount of all Excess Payments in respect of any other tender offers
or other negotiated transactions by the Company or any of its
Subsidiaries for Common Stock concluded within the 12 months
preceding the Purchase Date and in respect of which no adjustment in
the Conversion Price pursuant to paragraph (c) or (d) of this Section
or this paragraph (e) has been made, exceeds 12.5% of the product of
the Current Market Price per share (determined as provided in
paragraph (f) of this Section) of the Common Stock on the Purchase
Date multiplied by the number of shares of Common Stock outstanding
on the Purchase Date (including any tendered shares but excluding any
shares held in the treasury of the Company), the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying such Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
paragraph (e) by a fraction of which the numerator shall be the
Current Market Price per share (determined as provided in paragraph
(f) of this Section) of the Common Stock on the Purchase Date less
the sum of the aggregate amount of cash and the aggregate Excess
Payments so distributed, paid or payable within such 12 month period
(including, without limitation, the Excess Payment in respect of
which such adjustment is being made) applicable to one share of
Common Stock (which shall be determined by dividing the sum of the
aggregate amount of cash and the aggregate Excess Payments so
distributed, paid or payable within such 12 months (including,
without limitation, the Excess Payment in respect of which such
adjustment is being made) by the number of shares of Common Stock
outstanding on the Purchase Date and the denominator shall be such
Current Market Price per share (determined as provided in paragraph
(f) of this Section) of the Common Stock on the Purchase Date, such
reduction to become effective immediately prior to the opening of
business on the day following the Purchase Date.
(f) The "Current Market Price" per share of Common
Stock on any date shall be deemed to be the average of the Daily
Market Prices for the shorter of (i) 30 consecutive Trading Days
ending on the last full Trading Day on the exchange or market
referred to in determining such Daily Market Prices prior to the time
of determination or (ii) the period commencing on the date next
succeeding the first public announcement of the issuance of such
rights or such warrants or such other distribution or such tender
offer or other negotiated transaction through such last full Trading
Day on the exchange or market referred to in determining such Daily
Market Prices prior to the time of determination.
(g) "Excess Payment" means the excess of (A) the
aggregate of the cash and fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence
of such fair market value and described in a Board Resolution
delivered to the Trustee) of other consideration paid by the Company
or any of its Subsidiaries with respect to the shares acquired in a
tender offer or other negotiated transaction over (B) the Daily
Market Price on the Trading Day immediately following the completion
of the tender offer or other negotiated transaction multiplied by the
number of acquired shares.
(h) In any case in which this Section 5.06 shall require
that an adjustment be made immediately following a record date for an
event, the Company may elect to defer, until such event, issuing to
the holder of any Security converted after such record date the
shares of Common Stock and other Capital Stock of the Company
issuable upon such conversion over and above the shares of Common
Stock and other Capital Stock of the Company issuable upon such
conversion on the basis of the Conversion Price prior to adjustment;
and, in lieu of the shares the issuance of which is so deferred, the
Company shall issue or cause its transfer agents to issue due bills
or other appropriate evidence of the right to receive such shares.
Section 5.07. No Adjustment. No adjustment in the
Conversion Price shall be required until cumulative adjustments
amount to 1% or more of the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this
Section 5.07 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations
under this Article V shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. No adjustment
need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. No
adjustment need be made for a change in the par value or no par value
of the Common Stock.
Section 5.08. Other Adjustments.
(a) In the event that, as a result of an adjustment made
pursuant to Section 5.06 above, the holder of any Security thereafter
surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of its
Common Stock, thereafter the Conversion Price of such other shares so
receivable upon conversion of any Securities shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Common
Stock contained in this Article V.
(b) In the event that any shares of Common Stock issuable
upon exercise of any of the rights, options or warrants referred to
in Section 5.06(b) and Section 5.06(c) hereof are not delivered prior
to the expiration of such rights, options, or warrants, the
Conversion Price shall be readjusted to the Conversion Price which
would otherwise have been in effect had the adjustment made upon the
issuance of such rights, options or warrants been made on the basis
of delivery of only the number of such rights, options and warrants
which were actually exercised.
Section 5.09. Adjustments for Tax Purposes. The Company
may, at its option, make such reductions in the Conversion Price, in
addition to those required by Section 5.06 above, as the Board of
Directors deems advisable to avoid or diminish any income tax to
holders of Common Stock resulting from any dividend or distribution
of stock (or rights to acquire stock) or from any event treated as
such for federal income tax purposes.
Section 5.10. Adjustments by the Company. The Company from
time to time may, to the extent permitted by law, reduce the
Conversion Price by any amount for any period of at least 20 days, in
which case the Company shall give at least 15 days' notice of such
reduction in accordance with Section 5.11, if the Board of Directors
has made a determination that such reduction would be in the best
interests of the Company, which determination shall be conclusive.
Section 5.11. Notice of Adjustment. Whenever the
Conversion Price is adjusted, the Company shall promptly mail to
Noteholders at the addresses appearing on the Registrar's books a
notice of the adjustment and file with the Trustee an Officers'
Certificate briefly stating the facts requiring the adjustment and
the manner of computing it.
Section 5.12. Notice of Certain Transactions. In the event
that:
(a) the Company takes any action which would
require an adjustment in the Conversion Price;
(b) the Company takes any action that would require
a supplemental indenture pursuant to Section 5.13; or
(c) there is a dissolution or liquidation of the
Company;
the Company shall mail to Noteholders at the addresses appearing on
the Registrar's books and the Trustee a notice stating the proposed
record or effective date, as the case may be. The Company shall mail
the notice at least 15 days before such date; however, failure to
mail such notice or any defect therein shall not affect the validity
of any transaction referred to in clause (a), (b), (c), (d) or (e) of
this Section 5.12.
Section 5.13. Effect of Reclassifications, Consolidations,
Mergers, Continuances or Sales on Conversion Privilege. If any of
the following shall occur, namely: (i) any reclassification or change
of outstanding shares of Common Stock issuable upon conversion of
Securities (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination), (ii) any consolidation or merger to
which the Company is a party other than a merger in which the Company
is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in name, or par
value, or from par value to no par value, or from no par value to par
value or as a result of a subdivision or combination) in, outstanding
shares of Common Stock, (iii) any continuance in a new jurisdiction
which does not result in any reclassification of, or change (other
than a change in name, or par value, or from par value to no par
value, or from no par value to par value) in, outstanding shares of
Common Stock, or (iv) any sale or conveyance of all or substantially
all of the property of the Company (determined on a consolidated
basis), then the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, continuance,
sale or conveyance, execute and deliver to the Trustee a supplemental
indenture in form satisfactory to the Trustee providing that the
holder of each Security then outstanding shall have the right to
convert such Security into the kind and amount of shares of stock and
other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, continuance, sale or
conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to
such reclassification, change, consolidation, merger, continuance,
sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion
Price provided for in this Article V. The foregoing, however, shall
not in any way affect the right a holder of a Security may otherwise
have, pursuant to clause (ii) of the last sentence of subsection (c)
of Section 5.06, to receive Rights upon conversion of a Security.
If, in the case of any such consolidation, merger, continuance, sale
or conveyance, the stock or other securities and property (including
cash) receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and property of a corporation or
other business entity other than the successor or purchasing
corporation, as the case may be, in such consolidation, merger,
continuance, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation or other business
entity and shall contain such additional provisions to protect the
interests of the holders of the Securities as the Board of Directors
of the Company shall reasonably consider necessary by reason of the
foregoing. The provision of this Section 5.13 shall similarly apply
to successive consolidations, mergers, continuances, sales or
conveyances.
In the event the Company shall execute a supplemental
indenture pursuant to this Section 5.13, the Company shall promptly
file with the Trustee (x) an Officers' Certificate briefly stating
the reasons therefor, the kind or amount of shares of stock or
securities or property (including cash) receivable by holders of the
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, continuance, sale or
conveyance and any adjustment to be made with respect thereto (y) and
Opinion of Counsel stating that all conditions precedent relating to
such transaction have been complied with, and shall promptly mail
notice thereof to all holders.
Section 5.14. Trustee's Disclaimer. The Trustee has no
duty to determine when an adjustment under this Article V should be
made, how it should be made or what such adjustment should be or
whether a supplemental indenture is required by this Article V, but
may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying upon the Officers'
Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 5.11. The Trustee makes no
representation as to the validity or value of any securities or
assets issued upon conversion of Securities, and the Trustee shall
not be responsible for the Company's failure to comply with any
provisions of this Article V.
The Trustee shall not be under any responsibility to
determine the correctness of any provisions contained in any
supplemental indenture executed pursuant to Section 5.13, but may
accept as conclusive evidence of the correctness thereof, and shall
be protected in relying upon, the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee
pursuant to Section 5.13.
Section 5.15. Cancellation of Converted Securities. All
Securities delivered for conversion shall be delivered to the Trustee
to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 2.11.
Section 5.16. Restriction on Common Stock Issuable Upon
Conversion. (a) Shares of Common Stock to be issued upon conversion
of Securities prior to the effectiveness of a Shelf Registration
Statement shall be physically delivered in certificated form to the
holders converting such Securities and the certificate representing
such shares of Common Stock shall bear the Restricted Common Stock
Legend unless removed in accordance with Section 5.16(c).
(b) If (i) shares of Common Stock to be issued upon
conversion of a Security prior to the effectiveness of a Shelf
Registration Statement are to be registered in a name other than that
of the holder of such Security or (ii) shares of Common Stock
represented by a certificate bearing the Restricted Common Stock
Legend are transferred subsequently by such holder, then, unless the
Shelf Registration Statement has become effective and such shares are
being transferred pursuant to the Shelf Registration Statement, the
holder must deliver to the transfer agent for the Common Stock a
certificate in substantially the form of Exhibit E as to compliance
with the restrictions on transfer applicable to such shares of Common
Stock and neither the transfer agent nor the registrar for the Common
Stock shall be required to register any transfer of such Common Stock
not so accompanied by a properly completed certificate.
(c) Except in connection with a Shelf Registration
Statement, if certificates representing shares of Common Stock are
issued upon the registration of transfer, exchange or replacement of
any other certificate representing shares of Common Stock bearing the
Restricted Common Stock Legend, or if a request is made to remove
such Restricted Common Stock Legend from certificates representing
shares of Common Stock, the certificates so issued shall bear the
Restricted Common Stock Legend, or the Restricted Common Stock Legend
shall not be removed, as the case may be, unless there is delivered
to the Company such satisfactory evidence, which, in the case of a
transfer made pursuant to Rule 144 under the Securities Act, may
include an opinion of counsel licensed to practice law in the State
of New York, as may be reasonably required by the Company, that
neither the legend nor the restrictions on transfer set forth therein
are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144 or Regulation S under the
Securities Act or that such shares of Common Stock are securities
that are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision to the Company of such reasonably
satisfactory evidence, the Company shall cause the transfer agent for
the Common Stock to countersign and deliver certificates representing
shares of Common Stock that do not bear the legend.
ARTICLE VI
SUBORDINATION
Section 6.01. Agreement to Subordinate. The Company, for
itself and its successors, and each Noteholder, by his acceptance of
Securities, agree that the payment of the principal of and premium,
if any, interest, Liquidated Damages, if any, and any other amounts
due on the Securities is subordinated in right of payment, to the
extent and in the manner stated in this Article VI, to the prior
payment in full of all existing and future Senior Debt. Anything
herein to the contrary notwithstanding, the provisions of this
Article VI shall not be applicable with respect to any Liquidated
Damages payable in respect of shares of Common Stock issued on
conversion of Securities.
Section 6.02. No Payment on Securities if Senior Debt in
Default. Anything in this Indenture to the contrary notwithstanding,
no payment on account of principal of or premium, if any, interest or
Liquidated Damages, if any on or other amounts due on the Securities
(including the making of a deposit pursuant to Section 3.05 or
3.08(f)), and no redemption, purchase, or other acquisition of the
Securities, shall be made by or on behalf of the Company unless
(i) full payment of all amounts then due for principal of and interest
on, and of all other amounts then due on, all Senior Debt has been
made or duly provided for pursuant to the terms of the instruments
governing such Senior Debt and (ii) at the time for, and immediately
after giving effect to, such payment, redemption, purchase or other
acquisition, there shall not exist under any Senior Debt, or any
agreement pursuant to which any Senior Debt is issued, any default
which shall not have been cured or waived and which default shall
have resulted in the full amount of such Senior Debt being declared
due and payable. In addition, if the Trustee shall receive written
notice from the holders of Designated Senior Debt or their
Representative (a "Payment Blockage Notice") that there has occurred
and is continuing under such Designated Senior Debt, or any agreement
pursuant to which such Designated Senior Debt is issued, any default,
which default shall not have been cured or waived, giving the holders
of such Designated Senior Debt the right to declare such Designated
Senior Debt immediately due and payable, then, anything in this
Indenture to the contrary notwithstanding, no payment on account of
the principal of or premium, if any, interest or Liquidated Damages,
if any, on or any other amounts due on the Securities (including,
without limitation, the making of a deposit pursuant to Section 3.05
or 3.08(f)), and no redemption, purchase or other acquisition of the
Securities, shall be made by or on behalf of the Company during the
period (the "Payment Blockage Period") commencing on the date of
receipt of the Payment Blockage Notice and ending (unless earlier
terminated by notice given to the Trustee by the holders or the
Representative of the holders of such Designated Senior Debt) on the
earlier of (a) the date on which such default shall have been cured
or waived or (b) 180 days from the receipt of the Payment Blockage
Notice. Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained in
Section 6.01 and the first sentence of this Section 6.02), unless the
holders of such Designated Senior Debt or the Representative of such
holders shall have accelerated the maturity of such Designated Senior
Debt, the Company may resume payments on the Securities after the end
of such Payment Blockage Period. Not more than one Payment Blockage
Notice may be given in any consecutive 365-day period, irrespective
of the number of defaults with respect to Senior Debt during such
period.
In the event that, notwithstanding the provisions of this
Section 6.02, payments are made by or on behalf of the Company in
contravention of the provisions of this Section 6.02, such payments
shall be held by the Trustee, any Paying Agent or the holders, as
applicable, in trust for the benefit of, and shall be paid over to
and delivered to, the Representative of the holders of Senior Debt or
the trustee under the indenture or other agreement (if any), pursuant
to which any instruments evidencing any Senior Debt may have been
issued for application to the payment of all Senior Debt ratably
according to the aggregate amounts remaining unpaid to the extent
necessary to pay all Senior Debt in full in accordance with the terms
of such Senior Debt, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
The Company shall give prompt written notice to the Trustee
and any Paying Agent of any default or event of default under any
Senior Debt or under any agreement pursuant to which any Senior Debt
may have been issued.
Section 6.03. Distribution on Acceleration of Securities;
Dissolution and Reorganization; Subrogation of Securities.
(a) If the Securities are declared due and payable because
of the occurrence of an Event of Default, the Company shall give
prompt written notice to the holders of all Senior Debt or to the
trustee(s) for such Senior Debt of such acceleration. The Company
may not pay the principal of, or premium, if any, interest or
Liquidated Damages, if any, on, or any other amounts due on, the
Securities until five Business Days after such holders or trustee(s)
of Senior Debt receive such notice and, thereafter, the Company may
pay the principal of, and premium, if any, interest and Liquidated
Damages, if any, on, and any other amounts due on, the Securities
only if the provisions of this Article VI permit such payment.
(b) Upon (i) any acceleration of the principal amount due on
the Securities because of an Event of Default or (ii) any direct or
indirect distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or any other dissolution,
winding up, liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be
entitled to receive payment in full of the principal
thereof, the interest thereon and any other amounts due
thereon before the holders are entitled to receive payment
on account of the principal of , or premium, if any,
interest or Liquidated Damages, if any, on, or any other
amounts due on, the Securities (other than payments of
Junior Securities);
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities (other than Junior Securities), to which the
holders or the Trustee would be entitled (other than in
respect of amounts payable to the Trustee pursuant to
Section 9.07) except for the provisions of this Article,
shall be paid by the liquidating trustee or agent or other
Person making such a payment or distribution, directly to
the holders of Senior Debt (or their representative(s) or
trustee(s) acting on their behalf), ratably according to the
aggregate amounts remaining unpaid on account of the
principal of and interest on and other amounts due on the
Senior Debt held or represented by each, to the extent
necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Debt;
and
(3) in the event that, notwithstanding the
foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities (other than Junior Securities), shall be
received by the Trustee (other than in respect of amounts
payable to the Trustee pursuant to Section 9.07) or the
holders before all Senior Debt is paid in full, such payment
or distribution shall be held in trust for the benefit of,
and be paid over to upon request by a holder of Senior Debt,
to the holders of the Senior Debt remaining unpaid or their
representatives or trustee(s) acting on their behalf,
ratably as aforesaid, for application to the payment of such
Senior Debt until all such Senior Debt shall have been paid
in full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the
holders shall be subrogated to the rights of the holders of Senior
Debt to receive payments and distributions of cash, property or
securities of the Company applicable to the Senior Debt until the
principal of, and premium, if any, interest and Liquidated Damages,
if any on, and all other amounts payable in respect of the Securities
shall be paid in full and, for purposes of such subrogation, no such
payments or distributions to the holders of Senior Debt of cash,
property or securities which otherwise would have been payable or
distributable to holders shall, as between the Company, its creditors
other than the holders of Senior Debt, and the holders, be deemed to
be a payment by the Company to or on account of the Senior Debt, it
being understood that the provisions of this Article are and are
intended solely for the purpose of defining the relative rights of
the holders, on the one hand, and the holders of Senior Debt, on the
other hand.
Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall (i) impair, as
between the Company and its creditors other than the holders of
Senior Debt, the obligation of the Company, which is absolute and
unconditional, to pay to the holders the principal of, premium, if
any, on, and interest and Liquidated Damages, if any, on, the
Securities as and when the same shall become due and payable in
accordance with the terms of the Securities, (ii) affect the relative
rights of the holders and creditors of the Company other than holders
of Senior Debt or, as between the Company and the Trustee, the
obligations of the Company to the Trustee, or (iii) prevent the
Trustee or the holders from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article of the holders of
Senior Debt in respect of cash, property and securities of the
Company received upon the exercise of any such remedy.
Upon distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 9.01
hereof, and the holders shall be entitled to rely upon a certificate
of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the holders for the purpose of
ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article. The Trustee, however, shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt.
Nothing contained in this Article or elsewhere in this Indenture, or
in any of the Securities, shall prevent the good faith application by
the Trustee of any moneys which were deposited with it hereunder,
prior to its receipt of written notice of facts which would prohibit
such application, for the purpose of the payment of or on account of
the principal of, premium, if any, on, interest or Liquidated
Damages, if any, on, the Securities unless, prior to the date on
which such application is made by the Trustee, the Trustee shall be
charged with actual notice under Section 6.03(d) hereof of the facts
which would prohibit the making of such application.
(c) The provisions of this Article shall not be applicable
to any cash, properties or securities received by the Trustee or by
any holder when received as a holder of Senior Debt and nothing in
Section 9.11 hereof or elsewhere in this Indenture shall deprive the
Trustee or such holder of any of its rights as such holder.
(d) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment of money to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article. The Trustee,
subject to the provisions of Section 9.01 hereof, shall be entitled
to assume that no such fact exists unless the Company or any holder
of Senior Debt or any trustee therefor has given actual notice
thereof to the Trustee. Notwithstanding the provisions of this
Article or any other provisions of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any fact which
would prohibit the making of any payment of moneys to or by the
Trustee in respect of the Securities pursuant to the provisions in
this Article, unless, and until three Business Days after, the
Trustee shall have received written notice thereof from the Company
or any holder or holders of Senior Debt or from any trustee or
Representative therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section
9.01 hereof, shall be entitled in all respects conclusively to assume
that no such facts exist; provided that if on a date not less than
three Business Days immediately preceding the date upon which, by the
terms hereof, any such moneys may become payable for any purpose
(including, without limitation, to pay the principal of, premium, if
any, on, interest or Liquidated Damages, if any, on, any Security),
the Trustee shall not have received with respect to such moneys the
notice provided for in this Section 6.03(d), then anything herein
contained to the contrary notwithstanding, the Trustee shall have
full power and authority to receive such moneys and to apply the same
to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it on
or after such prior date.
The Trustee shall be entitled to rely conclusively on the
delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt (or a trustee or Representative on
behalf of such holder) to establish that such notice has been given
by a holder of Senior Debt (or a trustee or Representative on behalf
of any such holder or holders). In the event that the Trustee
determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article,
the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior
Debt held by such Person, the extent to which such person is entitled
to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and, if
such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such
Person to receive such payment; nor shall the Trustee be charged with
knowledge or the curing or waiving of any default of the character
specified in Section 6.02 hereof or that any event or any condition
preventing any payment in respect of the Securities shall have ceased
to exist, unless and until the Trustee shall have received written
notice to such effect.
(e) The provisions of this Section 6.03 applicable to the
Trustee shall (unless the context requires otherwise) also apply to
any Paying Agent for the Company.
Section 6.04. Reliance by Senior Debt on Subordination
Provisions. Each holder of any Security by his acceptance thereof
acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration for
each holder of any Senior Debt, whether such Senior Debt was created
or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior
Debt, and such holder of Senior Debt shall be deemed conclusively to
have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Debt.
Notice of any default in the payment of any Senior Debt, except as
expressly stated in this Article, and notice of acceptance of the
provisions hereof are, to the extent permitted by law, hereby
expressly waived. Except as otherwise expressly provided herein, no
waiver, forbearance or release by any holder of Senior Debt under
such Senior Debt or under this Article shall constitute a release of
any of the obligations or liabilities of the Trustee or holders of
the Securities provided in this Article.
Section 6.05. No Waiver of Subordination Provisions.
Except as otherwise expressly provided herein, no right of any
present or future holder of any Senior Debt to enforce subordination
as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or
by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Debt may, at any time and from time
to time, without the consent of, or notice to, the Trustee or the
holders of the Securities, without incurring responsibility to the
holders of the Securities and without impairing or releasing the
subordination provided in this Article VI or the obligations
hereunder of the holders of the Securities to the holders of Senior
Debt, do any one or more of the following: (i) change the manner,
place or terms of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which Senior
Debt is outstanding; (ii) sell, exchange, release or otherwise
dispose of any property pledged, mortgaged or otherwise securing
Senior Debt; (iii) release any person liable in any manner for the
collection of Senior Debt; and (iv) exercise or refrain from
exercising any rights against the Company or any other Person.
Section 6.06. Trustee's Relation to Senior Debt. The
Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article in respect of any Senior Debt at any
time held by it, to the same extent as any holder of Senior Debt, and
nothing in Section 9.11 hereof or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations, as are specifically set forth in this Article, and no
implied covenants or obligations with respect to the holders of
Senior Debt shall be read into this Indenture against the Trustee.
The Trustee shall not owe any fiduciary duty to the holders of Senior
Debt but shall have only such obligations to such holders as are
expressly set forth in this Article.
Each holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding up or liquidation or reorganization
under any applicable bankruptcy law of the Company (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the
timely filing of a claim for the unpaid balance of such holder's
Securities in the form required in such proceedings and the causing
of such claim to be approved. If the Trustee does not file a claim
or proof of debt in the form required in such proceedings prior to 30
days before the expiration of the time to file such claims or proofs,
then any holder or holders of Senior Debt or their Representative or
Representatives shall have the right to demand, sue for, collect,
receive and receipt for the payments and distributions in respect of
the Securities which are required to be paid or delivered to the
holders of Senior Debt as provided in this Article and to file and
prove all claims therefor and to take all such other action in the
name of the holders or otherwise, as such holders of Senior Debt or
Representative thereof may determine to be necessary or appropriate
for the enforcement of the provisions of this Article.
Section 6.07. Other Provisions Subject Hereto. Except as
expressly stated in this Article, notwithstanding anything contained
in this Indenture to the contrary, all the provisions of this
Indenture and the Securities are subject to the provisions of this
Article VI. However, nothing in this Article shall apply to or
adversely affect the claims of, or payment to, the Trustee pursuant
to Section 9.07 or the right of any holder of Common Stock issued
upon conversion of Securities to receive Liquidated Damages, if any,
in respect of such shares of Common Stock. Notwithstanding the
foregoing, the failure to make a payment on account of principal of,
premium, if any, on, or interest or Liquidated Damages, if any, on,
the Securities by reason of any provision of this Article VI shall
not be construed as preventing the occurrence of an Event of Default
under Section 8.01.
ARTICLE VII
SUCCESSORS
Section 7.01. Merger, Consolidation or Sale of Assets. The
Company will not consolidate or merge with or into any person
(whether or not the Company is the surviving corporation), continue
in a new jurisdiction or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or
assets unless:
(a) the Company is the surviving corporation (in
the case of a merger) or the Person formed by or surviving
any such consolidation or merger (if other than the Company)
or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and
assets of the Company is a corporation organized and
existing under the laws of the United States, any state
thereof or the District of Columbia; provided that in the
event of the continuation of the Company in the new
jurisdiction, the Company must remain a corporation
organized and existing under the laws of the United States,
any state thereof or the District of Columbia;
(b) the corporation formed by or surviving any such
consolidation or merger (if other than the Company) or the
corporation to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made assumes
all the obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to
the Trustee, under the Securities, the Registration
Agreement and the Indenture;
(c) such sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all
of the Company's properties or assets shall be as an
entirety or virtually as an entirety to one corporation and
such corporation shall have assumed all the obligations of
the Company, pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, under the
Securities, the Registration Agreement and the Indenture;
(d) immediately after such transaction no Default
or Event of Default exists; and
(e) the Company or such corporation shall have
delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such transaction and
the supplemental indenture, if required, comply with the
Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
Section 7.02. Successor Corporation Substituted. Upon any
consolidation or merger or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 7.01 hereof, the
successor corporation (if other than the Company) formed by such
consolidation or into or with which the Company is merged or the
corporation to which such sale, assignment, transfer, lease,
conveyance or other disposition is made shall succeed to, and be
substituted for and may exercise every right and power of, the
Company under this Indenture with the same effect as if such
successor Person has been named as the Company herein; provided,
however, that the predecessor Company in the case of a sale,
assignment, transfer, lease, conveyance or other disposition shall
not be released from the obligation to pay the principal of, premium,
if any, on and interest and Liquidated Damages, if any, on the
Securities.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.01. Events of Default. An "Event of Default"
occurs if:
(a) the Company defaults in the payment of any
interest or Liquidated Damages on any Security when the same
becomes due and payable and the default continues for a
period of 30 days; or
(b) the Company defaults in the payment of any
principal of or premium, if any, on any Security when the
same becomes due and payable, whether at maturity, upon
redemption or otherwise (including, without limitation,
failure by the Company to purchase Securities tendered for
purchase pursuant to a Designated Event Offer as and when
required pursuant to Section 3.08 or Section 4.07 hereof); or
(c) the Company fails to observe or perform any
covenant or agreement contained in Section 3.08 or Section
4.07 hereof; or
(d) the Company fails to observe or perform any
other covenant or agreement contained in this Indenture or
the Securities required by it to be performed and the
failure continues for a period of 60 days after the receipt
of written notice by the Company from the Trustee or by the
Company and the Trustee from the holders of at least 25% in
aggregate principal amount of the then outstanding
Securities stating that such notice is a "Notice of
Default"; or
(e) a default under any mortgage, indenture or
instrument under which there may be issued or by which there
may be secured or evidenced any Indebtedness for money
borrowed by the Company or any Material Subsidiary of the
Company (or the payment of which is Guaranteed by the
Company or any of its Material Subsidiaries), whether such
Indebtedness or Guarantee exists on the date of this
Indenture or is created thereafter, which default (i) is
caused by a failure to pay when due any principal of or
interest on such Indebtedness within the grace period
provided for in such Indebtedness (which failure continues
beyond any applicable grace period) (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior
to its express maturity (without such acceleration being
rescinded or annulled) and, in each case, the principal
amount of such Indebtedness, together with the principal
amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so
accelerated, aggregates $15,000,000 or more and which
Payment Default is not cured or which acceleration is not
annulled within 30 days after written receipt by the Company
from the Trustee or by the Company and the Trustee from any
holder of Securities stating that such notice is a "Notice
of Default"; or
(f) a final, non-appealable judgment or final
non-appealable judgments (other than any judgment as to
which a reputable insurance company has accepted full
liability) for the payment of money are entered by a court
or courts of competent jurisdiction against the Company or
any Material Subsidiaries of the Company and remain
unstayed, unbonded or undischarged for a period (during
which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such judgments exceeds
$15,000,000; or
(g) the Company or any Material Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or
proceeding; or
(B) consents to the entry of an order for
relief against the Company or any Material
Subsidiary in an involuntary case or proceeding; or
(C) consents to the appointment of a
Custodian of the Company or any Material Subsidiary
or for all or any substantial part of its property;
or
(D) makes a general assignment for the
benefit of its creditors; or
(E) take corporate or similar action in
respect of any of the foregoing; or
(h) a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or
any Material Subsidiary in an involuntary case or
proceeding; or
(B) appoints a Custodian of the Company
or any Material Subsidiary or for all or any
substantial part of the property of the Company or
any Material Subsidiary; or
(C) orders the liquidation of the Company
or any Material Subsidiary;
and in each case referred to in this paragraph (h) the order
or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal, state or foreign bankruptcy, insolvency or similar
law. The term "Custodian" means any custodian, receiver, trustee,
assignee, sequestor, liquidator or similar official under any
Bankruptcy Law.
Section 8.02. Acceleration. If an Event of Default (other
than an Event of Default specified in clauses (g) and (h) of
Section 8.01 hereof) occurs and is continuing, the Trustee by notice
to the Company, or the Noteholders of at least 25% in principal
amount of the then outstanding Securities by notice to the Company
and the Trustee, may declare all the Securities to be due and
payable. Upon such declaration, the principal of, premium, if any,
on and accrued and unpaid interest and Liquidated Damages, if
applicable, on the Securities shall be due and payable immediately.
If an Event of Default specified in clause (g) or (h) of Section 8.01
hereof occurs, the principal of, premium, if any, on and accrued and
unpaid interest and Liquidated Damages, if any, on the Securities
shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any
Noteholder. The Noteholders of a majority in aggregate principal
amount of the then outstanding Securities by notice to the Trustee
may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree, if all amounts
payable to the Trustee pursuant to Section 9.07 hereof have been paid
and if all existing Events of Default have been cured or waived as
provided for herein except nonpayment of principal, premium, if any,
interest or Liquidated Damages, if any, that has become due solely
because of the acceleration.
Section 8.03. Other Remedies. If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of, premium, if any, on or
interest and Liquidated Damages, if any, on, the Securities or to
enforce the performance of any provision of the Securities or this
Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Noteholder in
exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to
the extent permitted by law.
Section 8.04. Waiver of Past Defaults. Subject to
Section 8.07 hereof, the Noteholders of a majority in aggregate
principal amount of the then outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its
consequences except a continuing Default or Event of Default in the
payment of the Designated Event Payment or the principal of, premium,
if any, on, or interest or Liquidated Damages, if any, on, any
Security or in respect of a covenant in or other provision of this
Indenture or the Securities which cannot be amended or waived without
the consent of each Noteholder affected. When a Default or Event of
Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
Section 8.05. Control by Majority. The Noteholders of a
majority in principal amount of the then outstanding Securities may
direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that may be
unduly prejudicial to the rights of other Noteholders, or that may
involve the Trustee in personal liability; provided that the Trustee
may take any other action deemed by the Trustee that is not
inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
Section 8.06. Limitation on Suits. A Noteholder may pursue
a remedy with respect to this Indenture or the Securities only if:
(a) the Noteholder gives to the Trustee a
written notice of a continuing Event of Default;
(b) the Noteholders of at least 25% in
principal amount of the then outstanding Securities make a
written request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer and,
if requested, provide to the Trustee indemnity satisfactory
to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the
request within 60 days after receipt of the request and the
offer of indemnity; and
(e) during such 60-day period the Noteholders
of a majority in principal amount of the then outstanding
Securities do not give the Trustee a direction inconsistent
with the request.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority
over another Noteholder.
Section 8.07. Rights of Noteholders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Noteholder of a Security to receive payment of principal of,
premium, if any on, and interest and Liquidated Damages, if any, on
the Security, on or after the respective due dates expressed in the
Security and this Indenture, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Noteholder made
pursuant to this Section.
Section 8.08. Collection Suit by Trustee. If an Event of
Default specified in Section 8.01(a) or (b) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an
express trust against the Company for the whole amount of principal,
premium, if any, interest and Liquidated Damages, if any, remaining
unpaid on the Securities and, to the extent permitted by law,
interest on overdue principal, premium, if any, interest and
Liquidated Damages, if any and such further amount as shall be
sufficient to cover the costs and, to the extent lawful, expenses of
collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due under Section 9.07 hereof.
Section 8.09. Trustee May File Proofs of Claim. The
Trustee shall be entitled and empowered, without regard to whether
the Trustee or any holder shall have made any demand or performed any
other act pursuant to the provisions of this Article and without
regard to whether the principal of the Securities shall then be due
and payable as therein expressed or by declaration or otherwise, by
intervention in any proceedings relative to the Company or any other
obligor upon the Securities, or to the creditors or property or
assets of the Company or any such other obligor or otherwise, to take
any and all actions authorized under the TIA in order to have claims
of the holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be entitled and empowered in such
instances:
(a) to file and prove a claim or claims for
the whole amount of principal and premium, if any, interest,
Liquidated Damages, if any, and any other amounts owing and
unpaid in respect of the Securities, and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including all
amounts owing to the Trustee and each predecessor Trustee
pursuant to Section 9.07 hereof) and of the holders allowed
in any judicial proceedings relating to the Company or other
obligor upon the Securities property of the Company or any
such other obligor,
(b) unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the
Securities in any election of a trustee or a standby trustee
in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings, and
(c) to collect and receive any moneys or other
property or assets payable or deliverable on any such
claims, and to distribute all amounts received with respect
to the claims of the holders and of the Trustee on their
behalf; and any trustee, receiver, or liquidator, custodian
or other similar official is hereby authorized by each of
the holders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of
payments directly to the holders, to pay to the Trustee such
amounts as shall be sufficient to cover all amounts owing to
the Trustee and each predecessor Trustee pursuant to
Section 9.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of
any holder thereof, or to authorize the Trustee to vote in respect of
the claim of any holder of any such proceeding except, as aforesaid,
to vote for the election of a trustee in bankruptcy or similar person.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party), the Trustee shall
be held to represent all the holders of the Securities, and it shall
not be necessary to make any holders of the Securities parties to any
such proceedings.
Section 8.10. Priorities. If the Trustee collects any
money pursuant to this Article, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under
Section 9.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by
the Trustee and the costs and expenses of collection;
Second: to the holders of Senior Debt to the
extent required by Article VI;
Third: to the Noteholders, for amounts due and
unpaid on the Securities for principal, premium, if any,
interest and Liquidated Damages, if any, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if
any, interest and Liquidated Damages, if any; and
Fourth: to the Company or to such other party as a
court of competent jurisdiction shall direct.
Except as otherwise provided in Section 2.12 hereof, the
Trustee may fix a record date and payment date for any payment to
Noteholders made pursuant to this Section 8.10. At least 15 days
before such record date, the Company shall mail to each holder and
the Trustee a notice that states the record date, the payment date
and amount to be paid. The Trustee may mail such notice in the name
and at the expense of the Company.
Section 8.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any
suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith
of the claims or defenses made by the party litigant. This Section
does not apply to a suit by the Trustee, a suit by a holder pursuant
to Section 8.07 hereof, or a suit by Noteholders of more than 10% in
principal amount of the then outstanding Securities.
Section 8.12. Restoration of Rights and Remedies. If the
Trustee or any holder of Securities has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding
has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such holder, then and in
every such case the Company, the Trustee and the holders shall,
subject to any determination in such proceeding, be restored
severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the holders
shall continue as though no such proceeding has been instituted.
Section 8.13. Rights and Remedies Cumulative. Except as
otherwise provided in Section 2.07 hereof, no right or remedy
conferred herein, upon or reserved to the Trustee or to the holders
is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent (to the extent permitted by law) the
concurrent assertion or employment of any other appropriate right or
remedy.
Section 8.14. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any holder of any Security to exercise
any right or remedy accruing upon any Event of Default shall (to the
extent permitted by law) impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article VIII or by law
to the Trustee or to the holders may (to the extent permitted by law)
be exercised from time to time and as often as may be deemed
expedient, by the Trustee or by the holders, as the case may be.
ARTICLE IX
TRUSTEE
Section 9.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of
Default: (i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and (ii) in
the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished
to the Trustee and, if required by the terms hereof, conforming to
the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the applicable requirements, if any, of this
Indenture. During the continuance of an Event of Default, the
Trustee may consult with its legal counsel and rely upon advice from
such counsel with respect to legal matters.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that: (i) this paragraph does not
limit the effect of paragraph (b) of this Section 9.01; (ii) the
Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts and (iii) the Trustee
shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it
pursuant to Section 8.05 hereof.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of
this Section 9.01.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its rights
and powers under this Indenture at the request of any holders, unless
such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with
the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
Section 9.02. Rights of Trustee.
(a) Subject to the provisions of Section 9.01(a)
hereof, the Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel, or
both. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel of its
choice and the advice of such counsel or any Opinion of Counsel with
respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however, that
the Trustee's conduct does not constitute willful misconduct or
negligence.
(e) The Trustee shall not be charged with knowledge of
any Event of Default under subsection (c), (d), (e), (f), (g) or (h)
of Section 8.01 unless either (1) a Trust Officer assigned to its
corporate trust department shall have actual knowledge thereof, or
(2) the Trustee shall have received notice thereof in accordance with
Section 12.02 hereof from the Company or any holder; provided that
the Trustee shall comply with the "automatic stay" provisions
contained in U.S. Bankruptcy Law, if applicable.
(f) Prior to the occurrence of an Event of Default
hereunder and after the curing and waiving of all Events of Default,
the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debentures, note, other evidence of indebtedness or
other paper or document unless requested in writing to do so by the
holders of not less than a majority in aggregate principal amount of
the Securities then outstanding; provided that if the payment within
a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against
expenses or liabilities as a condition to proceeding; the reasonable
expenses of every such examination shall be paid by the Company or,
if advanced by the Trustee, shall be repaid by the Company upon
demand. The Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenants, conditions, or
agreements on the part of the Company, except as otherwise set forth
herein, but the Trustee may, in its discretion, make such further
inquiry or investigation into such facts or matters as it may see fit
and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company personally or by agent or attorney at the
sole cost of the Company.
(g) The Trustee shall not be required to give any bond
or surety in respect of the performance of its powers and duties
hereunder.
(h) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable
by, the Trustee in each of its capacities hereunder and to each Agent
employed to act hereunder.
Section 9.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee
of Securities and may otherwise deal with the Company or an Affiliate
with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, in the event that the
Trustee acquires any conflicting interest (as defined in the TIA) it
must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as Trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to
Sections 9.10 and 9.11 hereof.
Section 9.04. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company's use of
the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or any statement in
the Securities (other than its certificate of authentication) or for
compliance by the Company with the Registration Agreement.
Section 9.05. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to Noteholders a notice of the Default or
Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default relating to the failure to pay any
principal of or premium, if any, interest or Liquidated Damages, if
any, on any Security, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines
that withholding the notice is in the interests of Noteholders.
Section 9.06. Reports by Trustee to Noteholders. Within 60
days after the reporting date stated in Section 12.10, the Trustee
shall mail to Noteholders a brief report dated as of such reporting
date that complies with TIA S 313(a) if and to the extent required by
such S 313(a). The Trustee also shall comply with TIA S 313(b)(2).
The Trustee shall also transmit by mail all reports as required by
TIA S 313(c).
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on
which the Securities are listed. The Company shall notify the
Trustee when the Securities are listed on any stock exchange and of
any delisting thereof.
Section 9.07. Compensation and Indemnity. The Company
shall pay to the Trustee from time to time such compensation for its
services hereunder as shall be agreed upon from time to time in
writing by the Company and the Trustee. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request
for all reasonable disbursements, expenses and advances incurred or
made by it in connection with the performance of its duties
hereunder. Such disbursements and expenses may include the
reasonable disbursements, compensation and expenses of the Trustee's
agents and counsel.
The Company shall indemnify each of the Trustee and each
predecessor Trustee against any and all loss, damage, claim,
liability or expense incurred by it in connection with the
performance of its duties hereunder except as set forth in the next
paragraph. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to
notify the Company shall not release the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. If in the reasonable opinion of the
Trustee, a conflict of interest exists between the Trustee and the
Company with respect to such claim, the Trustee may have separate
counsel and the Company shall pay the reasonable fees, disbursements
and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the
Trustee's negligence or bad faith.
The obligations of the Company under this Section 9.07 shall
survive the resignation or removal of the Trustee and the
satisfaction and discharge of the Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien on all money or property held or
collected by the Trustee, except money or property held in trust to
pay principal of, or premium, if any, interest or Liquidated Damages,
if any, on, particular Securities. Such lien shall survive the
satisfaction or discharge of the indenture.
When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 8.01(g) or (h) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
Section 9.08. Replacement of Trustee. A resignation or
removal of the Trustee and appointment of a successor Trustee shall
become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the
Company. The Noteholders of a majority in principal amount of the
then outstanding Securities may remove the Trustee by so notifying
the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section
9.10 hereof, unless the Trustee's duty to resign is stayed
as provided in TIA S 310(b);
(b) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with respect to
the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge
of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Noteholders of a majority in principal
amount of the then outstanding Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring
Trustee, the Company or the Noteholders of at least 10% in principal
amount of the then outstanding Securities may petition, at the
expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 9.10 hereof,
unless the Trustee's duty to resign is stayed as provided in TIA S
310(b), any Noteholder who has been a bona fide holder of a Security
for at least six months may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company.
Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to
the lien provided for in Section 9.07 hereof. Notwithstanding the
resignation or replacement of the Trustee pursuant to this Section
9.08, the Company's obligations under Section 9.07 hereof shall
continue for the benefit of the retiring trustee with respect to
expenses and liabilities incurred by it prior to such resignation or
replacement.
Section 9.09. Successor Trustee by Merger, Etc. If the
Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall
be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Securities so authenticated;
and in case at that time any of the Securities shall not have been
authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the
Securities or in this Indenture provided that the certificate of the
Trustee shall have.
Section 9.10. Eligibility; Disqualification. This
Indenture shall always have a Trustee who satisfies the requirements
of TIA S 310(a)(1), (2) and (5). The Trustee shall always have a
combined capital and surplus as stated in Section 12.10 hereof. The
Trustee is subject to TIA S 310(b); provided, however, that there
shall be excluded from the operation of TIA S 310(b)(1) any indenture
or indentures under which other securities or certificates of
interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA
S 310(b)(1) are met.
Section 9.11. Preferential Collection of Claims Against
Company. The Trustee is subject to TIA S 311(a), excluding any
creditor relationship listed in TIA S 311(b). A Trustee who has
resigned or been removed shall be subject to TIA S 311(a) to the
extent indicated therein.
ARTICLE X
DISCHARGE OF INDENTURE
Section 10.01. Termination of the Company's Obligations.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange
of Securities herein expressly provided for and except as further
provided below), and the Trustee, on demand of and at the expense of
the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated
and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 2.07 and (ii) Securities for
whose payment money has theretofore been deposited in trust
and thereafter repaid to the Company as provided in
Section 10.02) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore
delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at the
final maturity date within one year, or
(C) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of clause (A), (B) or (C)
above, has irrevocably deposited or caused to be irrevocably
deposited with the Trustee as trust funds in trust for the
purpose cash in an amount sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal,
premium, if any, interest and Liquidated Damages, if any, to
the date of such deposit (in the case of Securities which
have become due and payable) or to the final maturity date
or redemption date, as the case may be, in all other cases;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under
Section 9.07, the obligations of the Company to pay Liquidated
Damages under this Indenture, the Securities and the Registration
Agreement and, if money shall have been deposited with the Trustee
pursuant to subclause (ii) of clause (a) of this Section, the
provisions of Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.11
(second paragraph only), 2.13, 2.15, 3.08, 4.02 (second paragraph
only), 4.04, 4.07 and 4.08, Article V and this Article X, shall
survive; and, notwithstanding the satisfaction and discharge of this
Indenture, the Company agrees to reimburse the Trustee for any costs
or expenses thereafter reasonably and properly incurred by the
Trustee and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with
this Indenture, the Registration Agreement or the Securities.
Thereupon, the Trustee upon request of the Company, shall acknowledge
in writing the discharge of the Company's obligations under this
Indenture, except for those surviving obligations specified above.
Subject to the provisions of Section 10.02, the Trustee
shall hold in trust, for the benefit of the holders, all money
deposited with it pursuant to this Section 10.01 and shall apply the
deposited money in accordance with this Indenture and the Securities
to the payment of the principal of, and premium, if any, interest and
Liquidated Damages, if any, on the Securities. Money so held in
trust shall not be subject to the subordination provisions of Article
VI.
Section 10.02. Repayment to Company. The Trustee and the
Paying Agent shall promptly pay to the Company upon request any
excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of
principal or interest that remains unclaimed for two years after the
date upon which such payment shall have become due; provided,
however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Noteholder entitled
thereto no less than 30 days prior to such payment or within such
period shall have published such notice in a financial newspaper of
widespread circulation published in The City of New York, including,
without limitation, The Wall Street Journal (national edition).
After payment to the Company, the Trustee and the Paying Agent shall
have no further liability with respect to such money and Noteholders
entitled to the money must look to the Company for payment as general
creditors unless any applicable abandoned property law designates
another person.
Section 10.03. Reinstatement. If the Trustee or any Paying
Agent is unable to apply any money in accordance with the second
paragraph of Section 10.01 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit
had occurred pursuant to Section 10.01 until such time as the Trustee
or such Paying Agent is permitted to apply all such money in
accordance with Section 10.01; provided, however, that if the Company
has made any payment of the principal of or premium, if any, interest
or Liquidated Damages, if any, on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to
the rights of the holders of such Securities to receive any such
payment from the money held by the Trustee or such Paying Agent.
ARTICLE XI
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.01. Without Consent of Noteholders. The Company
and the Trustee may amend or supplement this Indenture or the
Securities without the consent of any Noteholder:
(a) to cure any ambiguity, defect or
inconsistency;
(b) to comply with Sections 5.13 and 7.01
hereof;
(c) to provide for uncertificated Securities
in addition to certificated Securities;
(d) to make any change that does not adversely
affect the legal rights hereunder of any Noteholder;
(e) to qualify this Indenture under the TIA or
to comply with the requirements of the SEC in order to
maintain the qualification of the Indenture under the TIA;
(f) to make any change that provides any
additional rights or benefits to the holders of Securities;
or
(g) to evidence and provide for the acceptance
under the Indenture of a successor Trustee.
Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the
documents described in Section 11.07 hereof, the Trustee shall join
with the Company in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and
to make any further appropriate agreements and stipulations that may
be therein contained, but the Trustee shall not be obligated to enter
into such amended or supplemental Indenture that affects its own
rights, duties or immunities under this Indenture or otherwise.
An amendment under this Section may not make any change that
adversely affects the rights under Article VI of any holder of Senior
Debt then outstanding unless the holders of such Senior Debt (or any
group or representative thereof authorized to give a consent) consent
to such change.
Section 11.02. With Consent of Noteholders. Except as
provided below in this Section 11.02, the Company and the Trustee may
amend or supplement this Indenture or the Securities with the written
consent (including consents obtained in connection with any tender or
exchange offer for Securities) of the Noteholders of at least a
majority in principal amount of the then outstanding Securities.
Subject to Sections 8.04 and 8.07 hereof, the Noteholders of a
majority in principal amount of the Securities then outstanding may
also by their written consent (including consents obtained in
connection with any tender offer or exchange offer for Securities)
waive any existing Default or Event of Default as provided in Section
8.04 or waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities. However, without
the consent of each Noteholder affected, an amendment, supplement or
waiver under this Section may not (with respect to any Securities
held by a nonconsenting Noteholder):
(a) reduce the amount of Securities whose
Noteholders must consent to an amendment, supplement or
waiver;
(b) reduce the rate of, or change the time for
payment of, interest or Liquidated Damages on any Security;
(c) reduce the principal of or change the
fixed maturity of any Security or alter the redemption
provisions with respect thereto (including, without
limitation, the amount of any premium payable upon
redemption);
(d) make any Security payable in money other
than that stated in the Security;
(e) make any change in Section 8.04, 8.07 or
11.02 hereof (this sentence);
(f) waive a default in the payment of the
Designated Event Payment or any principal of, or premium, if
any, or interest or Liquidated Damages, if any, on, any
Security (other than a rescission of acceleration pursuant
to Section 8.02 hereof and a waiver of nonpayment of
principal, premium, if any, interest or Liquidated Damages,
if any, that have become due solely because of such
acceleration of the Securities);
(g) waive a redemption payment payable on any
Security; or
(h) make any change in the rights of holders
of Securities to receive payment of principal of, or
premium, if any, or interest or Liquidated Damages, if any,
on, the Securities;
(i) modify the conversion or subordination
provisions in a manner adverse to the holders of the
Securities; and
(j) impair the right of Noteholders to convert
Securities into Common Stock of the Company or otherwise to
receive any cash, securities or other property receivable by
a holder upon conversion of Securities.
Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of
Securities as aforesaid, and upon receipt by the Trustee of the
documents described in Section 11.07 hereof, the Trustee shall join
with the Company in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall
not be obligated to, enter into such amended or supplemental
Indenture.
To secure a consent of the Noteholders under this Section
11.02, it shall not be necessary for the Noteholders to approve the
particular form of any proposed amendment, supplement or waiver, but
it shall be sufficient if such consent approves the substance thereof.
Section 11.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
Section 11.04. Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by
a Noteholder of a Security is a continuing consent by the Noteholder
and every subsequent Noteholder of a Security or portion of a
Security that evidences the same debt as the consenting Noteholder's
Security, even if notation of the consent is not made on any
Security. However, any such Noteholder or subsequent Noteholder may
revoke the consent as to such Noteholder's Security or portion of a
Security if the Trustee receives the notice of revocation before the
date on which the Trustee receives an Officers' Certificate
certifying that the Noteholders of the requisite principal amount of
Securities have consented to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Noteholders entitled to
consent to any amendment, supplement or waiver. If a record date is
fixed, then notwithstanding the provisions of the immediately
preceding paragraph, those persons who were Noteholders at such
record date (or their duly designated proxies), and only those
persons, shall be entitled to consent to such amendment, supplement
or waiver or to revoke any consent previously given, whether or not
such persons continue to be Noteholders after such record date. No
consent shall be valid or effective for more than 90 days after such
record date unless consents from Noteholders of the principal amount
of Securities required hereunder for such amendment, supplement or
waiver to be effective shall have also been given and not revoked
within such 90-day period.
After an amendment, supplement or waiver becomes effective
it shall bind every Noteholder, unless it is of the type described in
any of clauses (a) through (j) of Section 11.02 hereof. In such
case, the amendment, supplement or waiver shall bind each Noteholder
who has consented to it and every subsequent Noteholder that
evidences the same debt as the consenting Noteholder's Security.
Upon the execution of any supplemental indenture under this
Article XI, this Indenture shall be modified in accordance therewith,
and such supplemental indenture shall form a part of this Indenture
for all purposes; and every holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound
thereby. After a supplemental indenture becomes effective, the
Company shall mail to holders a notice briefly describing such
amendment. The failure to give such notice to all holders, or any
defect therein, shall not impair or affect the validity of an
amendment under this Article.
Section 11.05. Notation on or Exchange of Securities. The
Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Security thereafter authenticated. The
Company in exchange for all Securities may issue and the Trustee
shall authenticate new Securities that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new
security shall not affect validity and effect of such amendment,
supplement or waiver.
Section 11.06. Trustee Protected. The Trustee shall sign
all supplemental indentures, except that the Trustee may, but need
not, sign any supplemental indenture that adversely affects its
rights.
Section 11.07. Trustee to Sign Supplemental Indentures.
The Company may not sign a supplemental Indenture until the Board of
Directors approves it. In executing any supplemental indenture, the
Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive and (subject to Section 9.01) shall
be fully protected in relying upon, in addition to the documents
required by Section 12.04, an Officers' Certificate and an Opinion of
Counsel stating that:
(a) such supplemental indenture is authorized
or permitted by this Indenture and that all conditions
precedent to the execution, delivery and performance of such
supplemental indenture have been satisfied;
(b) the Company has all necessary corporate
power and authority to execute and deliver the supplemental
indenture and that the execution, delivery and performance
of such supplemental indenture has been duly authorized by
all necessary corporate action of the Company;
(c) the execution, delivery and performance of
the supplemental indenture do not conflict with, or result
in the breach of or constitute a default under any of the
terms, conditions or provisions of (i) this Indenture,
(ii) the charter documents or by-laws of the Company, or
(iii) any material agreement or instrument to which the
Company is subject and of which such counsel is aware;
(d) to the knowledge of legal counsel writing
such Opinion of Counsel, the execution, delivery and
performance of the supplemental indenture do not conflict
with, or result in the breach of any of the terms,
conditions or provisions of (i) any law or regulation
applicable to the Company, or (ii) any material order, writ,
injunction or decree of any court or governmental
instrumentality applicable to the Company;
(e) such supplemental indenture has been duly
and validly executed and delivered by the Company, and this
Indenture together with such supplemental indenture
constitutes a legal, valid and binding obligation of the
Company enforceable against the Company, in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar
laws affecting the enforcement of creditors' rights
generally and general equitable principles (whether
considered in a proceeding at law or in equity); and
(f) this Indenture together with such
amendment or supplement complies with the TIA.
Section 11.08. Payment for Consent. Neither the Company
nor any Affiliate of the Company shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest,
fee or otherwise, to any holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of
this Indenture or the Securities unless such consideration is offered
to be paid to all holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies, or conflicts with
another provision which is automatically deemed to be incorporated in
this Indenture by the TIA, the incorporated provision shall control.
If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
Section 12.02. Notices. Any notice or communication by the
Company or the Trustee to the other is duly given if in writing and
delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), telecopier (promptly confirmed
in writing) or overnight air courier guaranteeing next day delivery
to the other's address stated in Section 12.10 hereof. The Company
or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall be mailed
by first-class mail, postage prepaid to his address shown on the
register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA S 313(c), to the
extent required by the TIA. Failure to mail a notice or
communication to a Noteholder or any defect in it shall not affect
its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether
or not the addressee receives it; a notice or communication, however,
shall not be effective unless, in the case of the Trustee, actually
received.
If the Company mails a notice or communication to
Noteholders, it shall mail a copy to the Trustee and each Agent at
the same time.
All other notices or communications shall be in writing.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any
notice as required by the Indenture, then such method of notification
as shall be made with the approval of the Trustee shall constitute a
sufficient mailing of such notice.
Section 12.03. Communication by Noteholders with Other
Noteholders. Noteholders may communicate pursuant to TIA S 312(b)
with other Noteholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA S 312(c).
Section 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall
furnish to the Trustee:
(a) an Officers' Certificate in form and
substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been
satisfied; and
(b) an Opinion of Counsel in form and
substance reasonably satisfactory to the Trustee (which
shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
In any case where several matters are required by, or
covered by an opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an opinion with
respect to some matters and one or more such Persons as to other
matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such Officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations by, an Officer or Officer
of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know,
that the certificate of opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Any Officers' Certificate, statement or Opinion of Counsel
may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representation by an accountant (who may
be an employee of the Company), or firm of accountants, unless such
Officer or counsel, as the case may be, knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representation with respect to the accounting matters upon which his
or her certificate, statement or opinion may be based as aforesaid is
erroneous.
Section 12.05. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other than
pursuant to Section 4.03) shall include:
(a) a statement that the Persons signing such
certificate or rendering such opinion has read such covenant
or condition;
(b) a brief statement as to the nature and
scope of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(c) a statement that, in the opinion of such
Person, such Person has made such examination or
investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been
complied with.
Section 12.06. Rules by Trustee and Agents. The Trustee
may make reasonable rules for action by, or a meeting of,
Noteholders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 12.07. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions in the
State of New York are not required to be open. If a payment date is
a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no
interest or Liquidated Damages shall accrue for the intervening
period unless the Company shall default in making the payment due on
such next succeeding day. If any other operative date for purposes
of this Indenture shall occur on a Legal Holiday then for all
purposes the next succeeding day that is not a Legal Holiday shall be
such operative date.
Section 12.08. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Noteholder
by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
Section 12.09. Counterparts. This Indenture may be
executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute
one and the same agreement.
Section 12.10. Variable Provisions. "Officer" means the
Chairman of the Board, the Chief Executive Officer, the President,
any Vice-President, the Chief Financial Officer, the Treasurer, the
Secretary, any Assistant Treasurer, any Assistant Secretary or the
Controller of the Company.
The Company initially appoints the Trustee as Paying Agent,
Registrar and Conversion Agent, and the Trustee hereby accepts such
appointments.
The first certificate pursuant to Section 4.03 hereof shall
be for the fiscal year ending on December 31, 2000.
The reporting date for Section 9.06 hereof is February 15 of
each year. The first reporting date is February 15, 2000.
The Trustee shall always have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published
annual report of condition.
The Company's address for purposes of the Indenture is:
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, New York 10010
Attention: Chief Financial Officer
Telephone No.: (212) 683-0001
Telecopier No.: (212) 889-0029
The Trustee's address is:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trust Trustee Administration
Telephone No.: (212) 815-5763
Telecopier No.: (212) 815-5915
The Company or the Trustee may change its address for
purposes of this Indenture by written notice to the other.
Section 12.11. GOVERNING LAW. THE INTERNAL LAWS OF THE
STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES,
WITHOUT REGARD, TO THE EXTENT PERMITTED BY LAW, TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
Section 12.12. No Adverse Interpretation of Other
Agreements. This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or an Affiliate.
Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 12.13. Successors. All agreements of the Company
in this Indenture and the Securities shall bind its successor. All
agreements of the Trustee in this Indenture shall bind its successor.
Section 12.14. Severability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or
unenforceable, then (to the extent permitted by law) the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.15. Table of Contents, Headings, Etc. The Table
of Contents and headings of the Articles and Sections of this
Indenture and the Securities have been inserted for convenience of
reference only, are not to be considered a part hereof or thereof,
and shall in no way modify or restrict any of the terms or provisions
hereof or thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
DoubleClick Inc., as Company,
By _______________________________
Name:
Title:
The Bank of New York, as Trustee,
By _____________________________________
Name:
Title:
EXHIBIT A
FORM OF CONVERTIBLE SUBORDINATED NOTE
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Restricted Global Securities Legend For Inclusion in Global
Securities Only]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE
SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO
THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION
(AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (4) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED
INVESTOR") THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS
TO THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER
MAY BE OBTAINED FROM THE TRUSTEE), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL ACCREDITED
INVESTOR AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION OR (3) NOT A U.S. PERSON AND IS OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S
UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH
REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.
[Restricted Definitive Securities Legend For Inclusion in Definitive
Securities Only]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN "AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE
SECURITIES ACT) OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO
THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
("INSTITUTIONAL ACCREDITED INVESTOR") (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH
TRANSFER, DELIVERS TO THE COMPANY AND THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM
OF WHICH LETTER MAY BE OBTAINED FROM THE TRUSTEE), (5) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (6) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE (6) ABOVE), THE HOLDER OF THIS
SECURITY MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE OF A
TRANSFER PURSUANT TO CLAUSE (5) ABOVE, A LEGAL OPINION AS THEY MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS
SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF
THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) AN
INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) NOT
A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
(OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE
THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE
SECURITIES ACT.
No. CUSIP No. [Global Security: ]
[Definitive Security: ]
4.75% Convertible Subordinated Note due 2006
DoubleClick Inc.
DoubleClick Inc., a Delaware corporation (the "Company"),
promises to pay to _____________________________________ or
registered assigns, the principal sum [indicated on Schedule A
hereof]* [of _________ Dollars ($_________)]** on March 15, 2006.
Interest Payment Dates: March 15 and September 15, commencing
September 15, 1999.
Record Dates: February 15 and August 15.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof which further provisions
shall for all purposes have the same effect as if set forth at this
place.
[Signature Page Follows]
IN WITNESS WHEREOF, DoubleClick Inc. has caused this
Security to be signed manually or by facsimile by its duly authorized
Officers and its corporate seal or a facsimile thereof to be affixed
hereto or imprinted hereon.
DOUBLECLICK INC.,
By: _______________________________
Name:
Title:
[Seal]
By: _______________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities described in the within-mentioned
Indenture.
THE BANK OF NEW YORK, as Trustee,
by ______________________________________
Authorized Signatory
DoubleClick Inc.
4.75% Convertible Subordinated Note due 2006
1. Interest. DoubleClick Inc., a Delaware corporation (the "Company"),
is the issuer of the 4.75% Convertible Subordinated Notes due 2006
(the "Securities"), of which this Security is a part. The Company
promises to pay interest on the Securities in cash semiannually on
each March 15 and September 15, commencing on September 15, 1999, to
holders of record at the close of business on the immediately
preceding February 15 or August 15, as the case may be.
Interest on the Securities will accrue from the most recent
date to which interest has been paid, or if no interest has been
paid, from March 22, 1999. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. To the extent lawful, the
Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal of and
premium, if any, interest, and Liquidated Damages, if any, on the
Securities (in each case without regard to any applicable grace
period) at the Default Rate, compounded semi-annually.
2. Damages, if any, on the Securities (except Defaulted Interest) to the
Persons who are registered holders of the Securities at the close of
business on the record date for the applicable interest payment date
even though Securities are canceled after the record date and on or
before the interest payment date. The Noteholder hereof must
surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal, premium, if any, interest
and Liquidated Damages, if any, in money of the United States that at
the time of payment is legal tender for payment of public and private
debts. However, the Company may pay interest by check payable in
such money. It may mail an interest check to a holder's registered
address.
3. Paying Agent and Registrar. The Trustee will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar, or Conversion Agent without prior notice.
4. Indenture. The Company issued the Securities under an indenture,
dated as of March 22, 1999 (the "Indenture"), between the Company and
The Bank of New York, as Trustee. The terms of the Securities
include those stated in the Indenture and those made part of the
Indenture by the Trust Indenture Act of 1939 (15 U.S. Code SS
77aaa-77bbbb) as in effect on the date of the Indenture. The
Securities are subject to, and qualified by, all such terms, certain
of which are summarized hereon, and Noteholders are referred to the
Indenture and such Act for a statement of such terms. The Securities
are general unsecured obligations of the Company limited to an
aggregate principal amount of up to $250,000,000. The Indenture does
not limit the ability of the Company or any of its Subsidiaries to
incur indebtedness or to grant security interests or liens in respect
of their assets.
5. Optional Redemption. The Securities are not redeemable at the
Company's option prior to March 20, 2001. On such date and
thereafter, the Securities will be subject to redemption at the
option of the Company, in whole or from time to time in part (in any
integral multiple of $1,000); provided that the Securities are not
redeemable prior to March 15, 2003 unless the Daily Market Price
exceeds 140% of the Conversion Price for at least 20 trading days in
any consecutive 30 trading day period ending on the trading day prior
to the date the notice of redemption is first mailed by the Company
pursuant to Section 3.03 of the Indenture. If redeemed during the
12-month period beginning March 15 of the years indicated (or
March 20 in the case of 2001), the redemption prices (expressed as
percentages of the principle amount( shall be as follows:
Year Redemption Price
2001 103.393%
2002 102.714%
2003 102.036%
2004 101.357%
2005 100.679%
in each case together with accrued interest and Liquidated Damages,
if any, to (but excluding) the redemption date (subject to the right
of holders of record on the relevant record date to receive interest
and Liquidated Damages, if any, due on the corresponding interest
payment date). On or after the redemption date, interest and
Liquidated Damages, if any, will cease to accrue on the Securities,
or portions thereof, called for redemption unless the Company shall
default in the payment of the redemption price and accrued interest
and Liquidated Damages, if any, payable on the redemption date on the
Securities to be redeemed.
6. Notice of Redemption. Notice of redemption will
be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of the Securities to be redeemed at
his address of record. Securities in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of
$1,000. In the event of a redemption of less than all of the
Securities, the Securities will be chosen for redemption by the
Trustee in accordance with the Indenture. Unless the Company
defaults in making such redemption payment (including accrued
interest and Liquidated Damages, if any), or a Paying Agent is
prohibited from making such payment pursuant to the Indenture, by law
or otherwise, interest and Liquidated Damages, if applicable cease to
accrue on the Securities or portions of them called for redemption on
and after the redemption date.
If this Security is redeemed subsequent to a record date
with respect to any interest payment date specified above and on or
prior to such interest payment date, then any accrued interest and
Liquidated Damages, if any, will be paid to the person in whose name
this Security is registered at the close of business on such record
date.
7. Mandatory Redemption. The Company will not be
required to make mandatory redemption payments with respect to the
Securities. There are no sinking fund payments with respect to the
Securities.
8. Repurchase at Option of Holder. If there is a
Designated Event, the Company shall be required to offer to purchase
on the Designated Event Payment Date all outstanding Securities at a
purchase price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the
Designated Event Payment Date; provided that, on the terms and
subject to the conditions set forth in the Indenture, the Company
shall not be required to offer to purchase the Securities as
aforesaid if the Company has given notice of redemption of all of the
outstanding Securities to holders in accordance with the Indenture.
Holders of Securities that are subject to an offer to purchase will
receive a Designated Event Offer from the Company prior to any
related Designated Event Payment Date and may elect to have such
Securities or portions thereof in authorized denominations purchased
by completing the form entitled "Option of Noteholder To Elect
Purchase" appearing below. Noteholders have the right to withdraw
their election by delivering a written notice of withdrawal to the
Company or the Paying Agent in accordance with the terms of the
Indenture.
9. Subordination. The payment of the principal of,
premium, if any, on, interest and Liquidated Damages, if any, on and
any other amounts due on the Securities is subordinated in right of
payment to all existing and future Senior Debt of the Company, as
described in the Indenture. Each Noteholder, by accepting a
Security, agrees to such subordination and authorizes and directs the
Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints
the Trustee as its attorney-in-fact for such purpose.
10. Conversion. The holder of any Security has the
right, exercisable at any time after 90 days following the Issuance
Date and prior to the close of business on the Business Day
immediately preceding the final maturity date of the Security, to
convert the principal amount thereof (or any portion thereof that is
an integral multiple of $1,000) into shares of Common Stock at the
initial Conversion Price of $165.00 per share, subject to adjustment
under certain circumstances as provided in the Indenture, except that
if a Security is called for redemption, the conversion right will
terminate at the close of business on the Business Day immediately
preceding the date fixed for redemption (unless the Company shall
default in making the redemption payment, including interest and
Liquidated Damages, if any, when it becomes due, in which case the
conversion right shall terminate at the close of business on the date
on which such default is cured). As further provided in the
Indenture, the Company agrees that, upon the occurrence of the Stock
Split (which it is currently contemplated will occur on April 2,
1999), the Conversion Price shall be automatically adjusted to $82.50
per share.
Beneficial owners of interests in Global Securities may
exercise their right of conversion by delivering to the Depositary
the appropriate instructions for conversion pursuant to the
Depositary's procedures. To convert a certificated Security, the
holder must (1) complete and sign a notice of election to convert
substantially in the form set forth below (or complete and manually
sign a facsimile thereof) and deliver such notice to a Conversion
Agent, (2) surrender the Security to a Conversion Agent, (3) furnish
appropriate endorsements or transfer documents if required by the
Conversion Agent, (4) pay any transfer or similar tax, if required by
the Conversion Agent, and (5) if required, pay funds equal to
interest and Liquidated Damages, if any, payable on the next interest
payment date. Upon conversion, no adjustment or payments will be
made for accrued and unpaid interest or Liquidated Damages, if any,
on the Securities so converted or for dividends or distributions on,
or Liquidated Damages, if any, attributable to, any Common Stock
issued on conversion of the Securities, except that, if any
Noteholder surrenders a Security for conversion after the close of
business on a record date for the payment of interest and prior to
the opening of business on the next interest payment date, then,
notwithstanding such conversion, the interest payable on such
interest payment date will be paid on such interest payment date to
the person who was the registered holder of such Security on such
record date. Any Securities surrendered for conversion during the
period after the close of business on any record date for the payment
of interest and before the opening of business on the next succeeding
interest payment date (except Securities called for redemption on a
redemption date or to be repurchased on a Designated Event Payment
Date during such period) must be accompanied by payment in an amount
equal to the interest and Liquidated Damages, if any, payable on such
interest payment date on the principal amount of Securities so
converted. The number of shares of Common Stock issuable upon
conversion of a Security is determined by dividing the principal
amount of the Security converted by the Conversion Price in effect on
the Conversion Date. No fractional shares will be issued upon
conversion but a cash adjustment will be made for any fractional
interest.
A Security in respect of which a holder has delivered an
"Option of Noteholder to Elect Purchase" form appearing below
exercising the option of such holder to require the Company to
purchase such Security may be converted only if the notice of
exercise is withdrawn as provided above and in accordance with the
terms of the Indenture. The above description of conversion of the
Securities is qualified by reference to, and is subject in its
entirety to, the more complete description thereof contained in the
Indenture.
11. Registration Agreement. The holder of this
Security is entitled to the benefits of a Registration Agreement,
dated March 22, 1999, between the Company and the Initial Purchasers
(the "Registration Agreement"). Pursuant to the Registration
Agreement the Company has agreed for the benefit of the holders of
the Securities and the Common Stock issued and issuable upon
conversion of the Securities, that (i) it will, at its cost, within
60 days after the Closing Date, file a shelf registration statement
(the "Shelf Registration Statement") with the Securities and Exchange
Commission (the "Commission") with respect to resales of the
Securities and the Common Stock issuable upon conversion thereof,
(ii) the Company will use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the
Commission under the Securities Act within 150 days after the Closing
Date and (iii) the Company will keep such Shelf Registration
Statement continuously effective under the Securities Act until the
earliest of (a) the second anniversary of the Closing Date or, if
later, the second anniversary of the last date on which any
Securities are issued upon exercise of the Initial Purchasers'
over-allotment option, (b) the date on which the Securities or the
Common Stock issuable upon conversion thereof may be sold by Persons
who are not "affiliates" (as defined in Rule 144) of the Company
pursuant to paragraph (k) of Rule 144 (or any successor provision)
promulgated by the Commission under the Securities Act, (c) the date
as of which the Securities or the Common Stock issuable upon
conversion thereof have been transferred pursuant to Rule 144 under
the Securities Act (or any similar provision then in force) and
(d) the date as of which all the Securities or the Common Stock
issuable upon conversion thereof have been sold pursuant to such
Shelf Registration Statement.
If the Shelf Registration Statement (i) is not filed with
the Commission on or prior to 60 days, or has not been declared
effective by the Commission within 150 days, after the Closing Date
or (ii) is filed and declared effective but shall thereafter cease to
be effective (without being succeeded immediately by a replacement
shelf registration statement filed and declared effective) or cease
to be usable (including, without limitation, as a result of a
Suspension Period as defined below) for the offer and sale of
Transfer Restricted Securities (as defined below) for a period of
time (including any Suspension Period) which shall exceed 60 days in
the aggregate in any 12-month period during the period beginning on
the Closing Date and ending on the second anniversary of the Closing
Date or, if later, the second anniversary of the last date on which
any Securities are issued upon exercise of the Initial Purchasers'
over-allotment option (each such event referred to in clauses (i) and
(ii) being referred to herein as a "Registration Default"), the
Company will pay liquidated damages ("Liquidated Damages") to each
holder of Transfer Restricted Securities which has complied with its
obligations under the Registration Agreement. The amount of
Liquidated Damages payable during any period in which a Registration
Default shall have occurred and be continuing is that amount which is
equal to one-quarter of one percent (25 basis points) per annum per
$1,000 principal amount of Securities and $2.50 per annum per 6.06061
shares of Common Stock (subject to adjustment from time to time in
the event of a stock split, stock recombination, stock dividend and
the like) constituting Transfer Restricted Securities for the first
90 days during which a Registration Default has occurred and is
continuing and one-half of one percent (50 basis points) per annum
per $1,000 principal amount of Securities and $5.00 per annum per
6.06061 shares of Common Stock (subject to adjustment as set forth
above) constituting Transfer Restricted Securities for any additional
days during which such Registration Default has occurred and is
continuing; provided that, as further provided in the Registration
Agreement, the Company hereby agrees that, upon the occurrence of the
Stock Split (which it is currently contemplated will occur on April
2, 1999), the Liquidated Damages payable in respect of Common Stock
shall be automatically adjusted to $2.50 per annum per 12.12121
shares of Common Stock for the first such 90 days during which a
Registration Default has occurred and is continuing and $5.00 per
annum per 12.12121 shares of Common Stock for any additional days
during which such Registration Default has occurred and is continuing
(in each case subject to further adjustment from time to time in the
event of a stock split, stock recombination, stock dividend and the
like). The Company will pay all accrued Liquidated Damages by wire
transfer of immediately available funds or by federal funds check on
each Damages Payment Date, and Liquidated Damages will be calculated
on the basis of a 360-day year consisting of twelve 30-day months.
Following the cure of a Registration Default, Liquidated Damages will
cease to accrue with respect to such Registration Default.
"Transfer Restricted Securities" means each Security and
each share of Common Stock issued on conversion thereof until the
earlier of the date (A) on which such Security or share, as the case
may be, (i) has been transferred pursuant to the Shelf Registration
Statement or another registration statement covering such Security or
share which has been filed with the Commission pursuant to the
Securities Act, in either case after such registration statement has
become and while such registration statement is effective under the
Securities Act, (ii) has been transferred pursuant to Rule 144 under
the Securities Act (or any similar provision then in force), or
(iii) may be sold or transferred pursuant to Rule 144(k) under the
Securities Act (or any similar provision then in force), or (B) that
is the second anniversary of the Closing Date or, if later, the
second anniversary of the last date on which any Securities are
issued upon exercise of the Initial Purchasers' over-allotment option.
Pursuant to the Registration Agreement, the Company may
suspend the use of the prospectus which is a part of the Shelf
Registration Statement for a period not to exceed 30 days in any
three-month period or for three periods not to exceed an aggregate of
90 days in any twelve-month period under certain circumstances (each,
a "Suspension Period"); provided that the existence of a Suspension
Period will not prevent the occurrence of a Registration Default or
otherwise limit the obligation of the Company to pay Liquidated
Damages.
The above description of certain provisions of the
Registration Agreement is qualified by reference to, and is subject
in its entirety to, the more complete description thereof contained
in the Registration Agreement.
12. Denominations, Transfer, Exchange and
Replacement. The Securities are in
registered form, without coupons, in
denominations of $1,000 and integral
multiples of $1,000. The transfer of
Securities may be registered, and
Securities may be exchanged, as provided
in the Indenture. The Registrar may
require a Noteholder, among other things,
to furnish appropriate endorsements and
transfer documents and to pay any taxes
and fees required by law or permitted by
the Indenture. The Registrar need not
exchange or register the transfer of any
Security or portion of a Security selected
for redemption (except the unredeemed
portion of any Security being redeemed in
part). Also, it need not exchange or
register the transfer of any Security for
a period beginning at the opening of
business 15 days before the day of mailing
of a notice of redemption of Securities
and ending at the close of business on the
day of such mailing. Replacement
Securities for lost, stolen or mutilated
Securities may be issued in accordance
with the terms of the Indenture.
13. Persons Deemed Owners. The registered
Noteholder of a Security may be treated as
its owner for all purposes.
14. Unclaimed Money. If money for the
payment of principal of or premium, if
any, interest or Liquidated Damages, if
any, on Securities remains unclaimed for
two years, the Trustee and the Paying
Agent shall pay the money back to the
Company at its written request. After
that, Noteholders of Securities entitled
to the money must look to the Company for
payment, unless an abandoned property law
designates another person, and all
liability of the Trustee and such Paying
Agent with respect to such money shall
cease.
15. Defaults and Remedies. The Securities
shall have the Events of Default as set
forth in Section 8.01 of the Indenture.
Subject to certain limitations in the
Indenture, if an Event of Default occurs
and is continuing, the Trustee by notice
to the Company or the Noteholders of at
least 25% in aggregate principal amount of
the then outstanding Securities by notice
to the Company and the Trustee may declare
all the Securities to be due and payable
immediately, except that in the case of an
Event of Default arising from certain
events of bankruptcy or insolvency, all
unpaid principal, premium, if any, and
accrued and unpaid interest and Liquidated
Damages, if any, on the Securities shall
become due and payable immediately without
further action or notice. Upon
acceleration as described in either of the
preceding sentences, the subordination
provisions of the Indenture preclude any
payment being made to Noteholders for at
least 5 Business Days except as otherwise
provided in the Indenture.
The Noteholders of a majority in principal amount of the
Securities then outstanding by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events
of Default have been cured or waived except nonpayment of principal,
premium, if any, Liquidated Damages, if any, and interest that has
become due solely because of the acceleration. Noteholders may not
enforce the Indenture or the Securities except as provided in the
Indenture. Subject to certain limitations, Noteholders of a majority
in principal amount of the then outstanding Securities issued under
the Indenture may direct the Trustee in its exercise of any trust or
power. The Company must furnish compliance certificates to the
Trustee annually. The above description of Events of Default and
remedies is qualified by reference to, and subject in its entirety
to, the more complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers.
Subject to certain exceptions, the
Indenture or the Securities may be amended
or supplemented with the consent of the
Noteholders of at least a majority in
principal amount of the then outstanding
Securities (including consents obtained in
connection with a tender offer or exchange
offer for Securities), and any existing
default may be waived with the consent of
the Noteholders of a majority in principal
amount of the then outstanding Securities
(including consents obtained in connection
with a tender offer or exchange offer for
Securities). Without the consent of any
Noteholder, the Indenture or the
Securities may be amended, among other
things, to cure any ambiguity, defect or
inconsistency, to provide for assumption
by a successor of the Company's
obligations to Noteholders, to make any
change that does not adversely affect the
rights of any Noteholder, to qualify the
Indenture under the TIA, or to comply with
the requirements of the SEC in order to
maintain the qualification of the
Indenture under the TIA.
17. Trustee Dealings with the Company. The
Trustee, in its individual or any other
capacity, may become the owner or pledgee
of the Securities and may otherwise deal
with the Company or an Affiliate of the
Company with the same rights it would
have, as if it were not Trustee, subject
to certain limitations provided for in the
Indenture and in the TIA. Any Agent may
do the same with like rights.
18. No Recourse Against Others. A director,
officer, employee or stockholder, as such,
of the Company shall not have any
liability for any obligations of the
Company under the Securities or the
Indenture or for any claim based on, in
respect of or by reason of such
obligations or their creation. Each
Noteholder, by accepting a Security,
waives and releases all such liability.
The waiver and release are part of the
consideration for the issue of the
Securities.
19. Governing Law; Indenture to Control. THE
INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE
SECURITIES WITHOUT REGARD, TO THE EXTENT
PERMITTED BY LAW, TO CONFLICT OF LAW
PROVISIONS THEREOF. IN THE EVENT OF ANY
CONFLICT BETWEEN THE PROVISIONS OF THIS
SECURITY ON THE ONE HAND AND THE INDENTURE
OR THE REGISTRATION AGREEMENT, ON THE
OTHER HAND, THE PROVISIONS OF THE
INDENTURE OR THE REGISTRATION AGREEMENT,
AS THE CASE MAY BE, SHALL CONTROL.
20. Authentication. The Securities shall not
be valid until authenticated by the manual
signature of an authorized signatory of
the Trustee or an authenticating agent.
21. Abbreviations. Customary abbreviations
may be used in the name of a Noteholder or
an assignee, such as: TEN COM (for tenants
in common), TEN ENT (for tenants by the
entireties), JT TEN (for joint tenants
with right of survivorship and not as
tenants in common), CUST (for Custodian),
and U/G/M/A (for Uniform Gifts to Minors
Act).
22. Definitions. Capitalized terms not
defined in this Security have the meanings
given to them in the Indenture.
The Company will furnish to any Noteholder of the Securities
upon written request and without charge a copy of the Indenture and
the Registration Agreement. Request may be made to:
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, New York 10010
CERTIFICATE OF TRANSFER
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
____________________________________________
(Insert assignee's social security or tax I.D. no.)
____________________________________________
____________________________________________
____________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________ agent to
transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Your Signature: ________________________________
(Sign exactly as your name appears on the other side of this
Security)
Date: ___________________
Medallion Signature Guarantee: ____________________
[For inclusion only if this Security bears a Restricted Securities
Legend] In connection with any transfer of any of the Securities
evidenced by this certificate which are "restricted securities" (as
defined in Rule 144 (or any successor thereto) under the Securities
Act), the undersigned confirms that such Securities are being
transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with
Rule 144A under the Securities Act of
1933; or
(3) |_| pursuant to and in compliance with
Regulation S under the Securities Act
of 1933; or
(4) |_| to an institutional "accredited
investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) that has
furnished to the Trustee a signed
letter containing certain
representations and agreements (the
form of which letter can be obtained
from the Trustee); or
(5) |_| pursuant to an exemption from
registration under the Securities Act
of 1933 provided by Rule 144
thereunder.
Unless one of the boxes is checked, the Registrar
will refuse to register any of the Securities
evidenced by this certificate in the name of any
person other than the registered holder thereof;
provided, however, that if box (3), (4) or (5) is
checked, the Trustee may require, prior to
registering any such transfer of the Securities,
such certifications and other information, and if
box (5) is checked such legal opinions, as the
Company has reasonably requested in writing, by
delivery to the Trustee of a standing letter of
instruction, to confirm that such transfer is being
made pursuant to an exemption from, or in a
transaction not subject to, the registration
requirements of the Securities Act of 1933;
provided that this paragraph shall not be
applicable to any Securities which are not
"restricted securities" (as defined in Rule 144 (or
any successor thereto) under the Securities Act).
Your Signature: __________________________________
(Sign exactly as your name appears on the other side of this Security)
Date: __________________
Medallion Signature Guarantee:
________________________________
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall
be $ . The following increases or decreases in the principal
amount of this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
- ----------------- ---------------------- ----------------------- ----------------------- =====================
Amount of increase
in Principal Amount
of this Global Amount of decrease in Principal Amount of Signature of
Security including Principal Amount of this Global Security authorized
Date Made upon exercise of this Global Security following such signatory of
over-allotment option decrease or increase Trustee or
Securities Custodian
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
- ----------------- ---------------------- ----------------------- ----------------------- =====================
</TABLE>
OPTION OF NOTEHOLDER TO ELECT PURCHASE
If you want to elect to have this Security or a portion
thereof repurchased by the Company pursuant to Section 3.08 or 4.07
of the Indenture, check the box: |_|
If the purchase is in part, indicate the portion ($1,000 or
any integral multiple thereof) to be purchased: ____________
Your Signature: ______________________________________
(Sign exactly as your name appears on the other side of
this Security)
Date: ____________
Medallion Signature Guarantee: _____________________
ELECTION TO CONVERT
To DoubleClick Inc.:
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Common
Stock of DoubleClick Inc. in accordance with the terms of the Indenture referred
to in this Security, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
The undersigned agrees to be bound by the terms of the Registration
Agreement relating to the Common Stock issued upon conversion of the Securities.
If you want to convert this Security in whole, check the box below. If you
want to convert this Security in part, indicate the portion of this Security to
be converted in the space provided below.
In whole |_| or Portion of Security to be
converted ($1,000 or any integral multiple thereof):
$______________
Date: ______________
Your Signature: ___________________
(Sign exactly as your name appears on
the other side of this Security)
Medallion Signature Guarantee:
________________________________
Please print or typewrite your name and address, including zip code, and social
security or other identifying number:
If the Common Stock is to be issued and delivered to someone other than you,
please print or typewrite the name and address, including zip code, and social
security or other identifying number of that person:
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR DEFINITIVE SECURITY
TO DEFINITIVE SECURITY
(Transfers pursuant to S 2.06(a)(ii) or S 2.06(a)(iii) of the Indenture)
The Bank of New York, as Registrar
Attn: Corporate Trust Trustee Administration
Re:DoubleClick Inc. 4.75% Convertible Subordinated
Notes due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March
22, 1999 (the "Indenture") between DoubleClick Inc. and The Bank of
New York, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.
This letter relates to U.S.
$ aggregate principal amount of
Securities which are held [in the form of a [Definitive] [Global
Security (CUSIP No. _____________)]* in the name of [name of
transferor] (the "Transferor") to effect the transfer of the
Securities.
In connection with such request, and in respect of such
Securities, the Transferor does hereby certify that such Securities
are being transferred (i) in accordance with the transfer
restrictions set forth in the Securities and the Indenture and (ii)
to a transferee that the Transferor reasonably believes is an
institutional "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the U.S. Securities Act of
1933, as amended) (an "Institutional Accredited Investor") which is
acquiring such Securities for its own account or for one or more
accounts, each of which is an Institutional Accredited Investors,
over which it exercises sole investment discretion and (iii) in
accordance with applicable securities laws of any state of the United
States.
[Name of Transferor],
By ____________________________
Name:
Title:
Dated:
cc: DoubleClick Inc.
Attn: Secretary
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to S 2.06(a)(ii) and S 2.06(a)(iii))
The Bank of New York, as Registrar
Attn: Corporate Trust Trustee Administration
Re: DoubleClick Inc. 4.75% Convertible Subordinated
Notes
due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March
22, 1999 (the "Indenture") between DoubleClick Inc., a Delaware
corporation (the "Company"), and The Bank of New York, as Trustee
(the "Trustee"). Capitalized terms used but not defined herein shall
have the meanings given them in the Indenture.
In connection with our proposed purchase of
$ aggregate principal amount of the Securities, which
are convertible into shares of common stock ("Common Stock") of the
Company, we confirm that:
1. We understand that the Securities and the
Common Stock issuable upon conversion thereof have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted
in the following sentence. We understand and agree, on our
own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, (x) that such Securities are
being transferred to us in a transaction not involving any
public offering within the meaning of the Securities Act,
(y) that if we should resell, pledge or otherwise transfer
any such Securities or any shares of Common Stock issuable
upon conversion thereof prior to the later of (I) the
expiration of the holding period under Rule 144(k) (or any
successor thereto) under the Securities Act which is
applicable to such Securities or shares of Common Stock, as
the case may be, or (II) within three months after we cease
to be an affiliate (within the meaning of Rule 144 under the
Securities Act) of the Company, such Securities or the
Common Stock issuable upon conversion thereof may be resold,
pledged or transferred only (i) to the Company, (ii) so long
as such Securities are eligible for resale pursuant to Rule
144A under the Securities Act ("Rule 144A"), to a person
whom we reasonably believe is a "qualified institutional
buyer" (as defined in Rule 144A) ("QIB") that purchases for
its own account or for the account of a QIB to whom notice
is given that the resale, pledge or transfer is being made
in reliance on Rule 144A (as indicated by the box checked by
the transferor on the Certificate of Transfer on the reverse
of the certificate for the Securities), it being understood
that the Common Stock is not eligible for resale pursuant to
Rule 144A, (iii) in an offshore transaction (as defined in
Regulation S under the Securities Act) in accordance with
Regulation S under the Securities Act (as indicated by the
box checked by the transferor on the Certificate of Transfer
on the reverse of the certificate for the Securities or on a
comparable Certificate of Transfer for the Common Stock
issuable upon conversion thereof), (iv) to an institution
that is an "accredited investor" as defined in Rule 501 (a)
(1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor") (as indicated by the
box checked by the transferor on the Certificate of Transfer
on the reverse of the certificate for the Securities or on a
comparable Certificate of Transfer for the Common Stock
issuable upon conversion thereof) that is acquiring the
securities for its own account or for the account of one or
more other Institutional Accredited Investors over which it
exercises sole investment discretion and that prior to such
transfer, delivers a signed letter to the Company and the
Trustee (or the transfer agent in the case of Common Stock
issuable upon conversion thereof) certifying that it and
each such account is such an Institutional Accredited
Investor and is acquiring the Securities or the Common Stock
issuable upon conversion thereof for investment purposes and
not for distribution and agreeing to the restrictions on
transfer of the Securities or the Common Stock issuable upon
conversion thereof, (v) pursuant to an exemption from
registration under the Securities Act provided by Rule 144
(if applicable) under the Securities Act (as indicated by
the box checked transferor on the Certificate of Transfer on
the reverse of the certificate for the Securities or a
comparable Certificate of Transfer for the Common Stock
issuable upon conversion thereof), or (vi) pursuant to an
effective registration statement under the Securities Act,
in each case in accordance with any applicable securities
laws of any state of the United States, and we will notify
any purchaser of the Securities or the Common Stock issuable
upon conversion thereof from us of the above resale
restrictions, if then applicable. We further understand
that in connection with any transfer of the Securities or
the Common Stock issuable upon conversion thereof (other
than a transfer pursuant to clause (vi) above) by us that
the Company and the Trustee (or the transfer agent in the
case of Common Stock issuable upon conversion thereof) may
request, and if so requested we will furnish, such
certificates and other information and, in the case of a
transfer pursuant to clause (v) above, a legal opinion as
they may reasonably require to confirm that any such
transfer complies with the foregoing restrictions. Finally,
we understand that in any case we will not directly or
indirectly engage in any hedging transactions with regard to
the Securities or the Common Stock issuable upon conversion
of the Securities except as permitted by the Securities Act.
2. We are able to fend for ourselves in
connection with our purchase of the Securities, we have such
knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment and can afford the complete loss of
such investment.
3. We understand that the Company and others
will rely upon the truth and accuracy of the foregoing
acknowledgments, representations, agreements and warranties
and we agree that if any of the acknowledgments,
representations, agreements or warranties made or deemed to
have been made by us by our purchase of the Securities, for
our own account or for one or more accounts as to each of
which we exercise sole investment discretion, are no longer
accurate, we shall promptly notify the Company.
4. With respect to the certificates
representing Securities we are purchasing, we understand
that such certificates will be in definitive registered form
and that the notification requirement referred to in (1)
above requires that, until the expiration of the holding
period with respect to sales of the Securities under clause
(k) of Rule 144 under the Securities Act, that such
Securities will bear a legend substantially to the following
effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD UNDER
RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT WHICH
IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT)
OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2)
SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN
AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL
ACCREDITED INVESTOR") (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO
THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER
MAY BE OBTAINED FROM THE TRUSTEE), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR
TO A TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (6) ABOVE), THE HOLDER OF THIS SECURITY MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES
AND OTHER INFORMATION AND, IN THE CASE OF A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE, A LEGAL OPINION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT
IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL
ACCREDITED INVESTOR AND THAT IT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) NOT A U.S. PERSON
AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF
WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS
WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES
ACT."
5. With respect to certificates representing
shares of Common Stock issuable upon conversion of the
Securities, we understand that the notification requirement
referred to in (1) above requires that, until the expiration
of the holding period with respect to sales of such Common
Stock under clause (k) of Rule 144 under the Securities Act,
such certificates will bear a legend substantially to the
effect set forth as Exhibit D to the Indenture and that a
copy of such legend may be obtained from the Trustee.
6. We are acquiring the Securities purchased
by us for investment purposes, and not for distribution, for
our own account or for one or more accounts as to each of
which we exercise sole investment discretion and we are and
each such account is an Institutional Accredited Investor.
7. You and the Company are entitled to rely
on this letter and you and the Company are irrevocably
authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered
hereby.
Very truly yours,
______________________________
(Name of Purchaser)
By:
______________________________
Dated:
cc: DoubleClick Inc.
Attn: Chief Financial Officer
41 Madison Avenue, 32nd Floor
New York, NY 10010
EXHIBIT D
FORM OF RESTRICTED COMMON STOCK LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY
THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD UNDER
RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT WHICH
IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT)
OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY,
(2) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER APPLICABLE TO THIS SECURITY, THE FORM OF
WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRANSFER AGENT), (3) TO
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL
ACCREDITED INVESTOR") (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER APPLICABLE TO THIS
SECURITY, THE FORM OF WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRANSFER AGENT) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION, AND THAT, PRIOR TO SUCH TRANSFER,
DELIVERS TO THE COMPANY AND THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM
OF WHICH LETTER MAY BE OBTAINED FROM THE COMPANY OR THE TRANSFER
AGENT), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER APPLICABLE TO THIS SECURITY, THE FORM OF
WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRANSFER AGENT) OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (5) ABOVE), THE HOLDER OF THIS SECURITY MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE OF A TRANSFER
PURSUANT TO CLAUSE (4) ABOVE, A LEGAL OPINION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT
FOR DISTRIBUTION OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S
UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD
TO THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT."
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OF RESTRICTED COMMON STOCK
(Transfers pursuant to S 5.16(c) of the Indenture)
[Name and Address of Common Stock Transfer Agent]
Re: DoubleClick Inc. 4.75% Convertible
Subordinated Notes due 2006 (the
"Securities")
Reference is hereby made to the Indenture dated as
of March 22, 1999 (the "Indenture") between DoubleClick Inc.
and The Bank of New York, as Trustee. Capitalized terms
used but not defined herein shall have the meanings given
them in the Indenture.
This letter relates to _________ shares of Common
Stock represented by the accompanying certificate(s) that
were issued upon conversion of Securities and which are held
in the name of [name of transferor] (the "Transferor") to
effect the transfer of such Common Stock.
In connection with the transfer of such shares of
Common Stock, the undersigned confirms that such shares of
Common Stock are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance
with Regulation S under the
Securities Act of 1933; or
(3) |_| to an institutional
"accredited investor" (as
defined in Rule 501(a)(1),
(2), (3) or (7) under the
Securities Act of 1933) that
has furnished to the transfer
agent a signed letter
containing certain
representations and
agreements (the form of which
letter can be obtained from
the Company or transfer
agent); or
(4) |_| pursuant to an exemption from
registration under the
Securities Act of 1933
provided by Rule 144
thereunder.
Unless one of the boxes is checked, the
transfer agent will refuse to register any
of the Common Stock evidenced by this
certificate in the name of any person
other than the registered holder thereof;
provided, however, that if box (2), (3) or
(4) is checked, the transfer agent may
require, prior to registering any such
transfer of the Common Stock such
certifications and other information, and
if box (4) is checked such legal opinions,
as the Company has reasonably requested in
writing, by delivery to the transfer agent
of a standing letter of instruction, to
confirm that such transfer is being made
pursuant to an exemption from, or in a
transaction not subject to, the
registration requirements of the
Securities Act of 1933.
[Name of Transferor],
By _____________________________
Name:
Title:
Dated:
cc: DoubleClick Inc.
Attn: Secretary
- --------
* Applicable to Global Securities only.
** Applicable to Definitive Securities only.
* Insert, if appropriate.
EXHIBIT 6.2
DoubleClick Inc.
4.75% Convertible Subordinated Notes due 2006
REGISTRATION AGREEMENT
New York, New York
March 22, 1999
Salomon Smith Barney Inc.
BT Alex. Brown Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
As Representatives of the Initial Purchasers Named in
Schedule I to the Purchase Agreement (as defined below)
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
DoubleClick Inc., a Delaware corporation (the "Company"),
proposes to issue and sell (such issuance and sale, the "Initial
Placement") to the several parties named in Schedule I to the
Purchase Agreement (the "Initial Purchasers") for whom you (the
"Representatives") are acting as representatives, upon the terms set
forth in a purchase agreement dated March 17, 1999 (the "Purchase
Agreement"), $200,000,000 aggregate principal amount (plus up to an
additional $50,000,000 aggregate principal amount to cover
over-allotments, if any) of its 4.75% Convertible Subordinated Notes
due 2006 (the "Securities"). The Securities will be convertible into
shares of common stock, par value $.001 per share, of the Company at
the conversion price set forth in the Offering Memorandum (as defined
herein), as the same may be adjusted from time to time pursuant to
the Indenture referred to below. As an inducement to you to enter
into the Purchase Agreement and in satisfaction of a condition to
your obligations thereunder, the Company agrees with you, (i) for
your benefit and (ii) for the benefit of the holders from time to
time of the Securities and the Common Stock issuable upon conversion
of the Securities (including you), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have the respective meanings set forth in the
Purchase Agreement. As used in this Agreement, the following
capitalized terms shall have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Affiliate" of any specified person means any other person,
directly or indirectly, controlling or controlled by or under direct
or indirect common control with such specified person. For the
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such person, whether
through the ownership of voting securities or by agreement or
otherwise.
"Business Day" has the meaning set forth in the Indenture.
"Closing Date" means March 22, 1999.
"Common Stock" means the common stock, par value $.001 per
share, of the Company, as it exists on the date of this Agreement and
any other shares of capital stock or other securities of the Company
into which such Common Stock may be reclassified or changed, together
with any and all other securities which may from time to time be
issuable upon conversion of Securities.
"Damages Payment Date" means, with respect to the Securities
or the Common Stock issuable upon conversion thereof, as applicable,
each Interest Payment Date; and in the event that any Security, or
portion thereof, is called for redemption or surrendered for purchase
by the Company and not withdrawn pursuant to a Designated Event Offer
(as defined in the Indenture), the relevant redemption date or
Designated Event Payment Date (as defined in the Indenture), as the
case may be, shall also be a Damages Payment Date with respect to
such Security, or portion thereof, unless the Indenture provides that
accrued and unpaid interest on the Security (or portion thereof) to
be redeemed or repurchased, as the case may be, is to be paid to the
person who was the Holder thereof on a record date prior to such
redemption date or Designated Event Payment Date, as the case may be,
in which case the Damages Payment Date shall be the date on which
interest is payable to such Record Holder.
"Default Rate" has the meaning set forth in the Indenture.
"DTC" has the meaning set forth in Section 3(k) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Final Maturity Date" means March 15, 2006.
"Holder" means a person who is a holder or beneficial owner
(including the Initial Purchasers) of any Securities or shares of
Common Stock issued upon conversion of Securities; provided that,
unless otherwise expressly stated herein, only registered holders of
Securities or Common Stock issued on conversion thereof shall be
counted for purposes of calculating any proportion of holders
entitled to take any action or give notice pursuant to this Agreement.
"Indenture" means the Indenture relating to the Securities
dated as of March 22, 1999, between the Company and The Bank of New
York, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the
preamble hereto.
"Initial Purchasers" has the meaning set forth in the
preamble hereto.
"Interest Payment Date" shall mean each March 15and
September 15.
"Liquidated Damages" has the meaning set forth in Section
2(e) hereof.
"Majority Holders" means the Holders of a majority of the
then outstanding aggregate principal amount of Securities registered
under a Shelf Registration Statement; provided that Holders of Common
Stock issued upon conversion of Securities shall be deemed to be
Holders of the aggregate principal amount of Securities from which
such Common Stock was converted; and provided, further, that
Securities or Common Stock which have been sold or otherwise
transferred pursuant to the Shelf Registration Statement shall not be
included in the calculation of Majority Holders.
"Majority Underwriting Holders" means, with respect to any
Underwritten Offering, the Holders of a majority of the then
outstanding aggregate principal amount of Securities registered under
any Shelf Registration Statement whose Securities are or are to be
included in such Underwritten Offering; provided that Holders of
Common Stock issued upon conversion of Securities should be deemed to
be Holders of the aggregate principal amount of Securities from which
such Common Stock was converted.
"Managing Underwriters" means the Underwriter or
Underwriters that shall administer an Underwritten Offering.
"NASD" has the meaning set forth in Section 3(i) hereof.
"Notice and Questionnaire" means a Notice of Registration
Statement and Selling Securityholder Questionnaire substantially in
the form of Exhibit A hereto.
"Offering Memorandum" means the Final Memorandum as defined
in the Purchase Agreement.
"Person" and "person" have the meaning set forth in the
Indenture.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule
430A under the Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion
of the Securities or Common Stock issuable upon conversion thereof
covered by such Shelf Registration Statement, and all amendments and
supplements to such prospectus, including all documents incorporated
or deemed to be incorporated by reference in such prospectus.
"Purchase Agreement" has the meaning set forth in the
preamble hereto.
"Record Holder" means (i) with respect to any Damages
Payment Date which occurs on an Interest Payment Date, each person
who is registered on the books of the registrar as the holder of
Securities at the close of business on the record date with respect
to such Interest Payment Date and (ii) with respect to any Damages
Payment Date relating to the Common Stock issued upon conversion
thereof, each person who is a holder of record of such Common Stock
fifteen days prior to the Damages Payment Date.
"Registration Default" has the meaning set forth in Section
2(e) hereof.
"Representatives" has the meaning set forth in the preamble
thereto.
"Rule 144" means Rule 144 (or any successor provision) under
the Act.
"SEC" means the Securities and Exchange Commission.
"Securities" has the meaning set forth in the preamble
hereto.
"Shelf Registration" means a registration effected pursuant
to Section 2 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 2(c) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 2
hereof which covers all of the Securities and the Common Stock
issuable upon conversion thereof, as applicable, on Form S-3 or on
another appropriate form for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 under the Act, or any similar
rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all documents incorporated or deemed to be
incorporated by reference therein.
"Stock Split" has the meaning set forth in the Indenture.
"Suspension Period" has the meaning set forth in Section
2(d) hereof.
"Transfer Restricted Securities" means each Security and
each share of Common Stock issued upon conversion thereof until the
earlier of (A) date on which such Security or share of Common Stock,
as the case may be, (i) has been transferred pursuant to the Shelf
Registration Statement or another registration statement covering
such Security or share of Common Stock which has been filed with the
SEC pursuant to the Act, in either case after such registration
statement has become effective and while such registration statement
is effective under the Act, (ii) has been transferred pursuant to
Rule 144 under the Act (or any similar provision then in force), or
(iii) may be sold or transferred pursuant to Rule 144(k) under the
Act (or any successor provision then in force), or (B) that is the
second anniversary of the Closing Date or, if later, the second
anniversary of the last date on which any Securities are issued upon
exercise of the Initial Purchasers' over-allotment option.
"Trustee" means the trustee with respect to the Securities
under the Indenture.
"Underwriter" means any underwriter of Securities or Common
Stock issuable upon conversion thereof in connection with an offering
thereof under a Shelf Registration Statement.
"Underwritten Offering" means an offering in which the
Securities or Common Stock issued upon conversion thereof are sold to
an Underwriter or with the assistance of an Underwriter for
reoffering to the public.
All references in this Agreement to financial statements and
schedules and other information which is "contained", "included", or
"stated" in the Shelf Registration Statement, any preliminary
Prospectus or Prospectus (and all other references of like import)
shall be deemed to mean and include all such financial statements and
schedules and other information which is incorporated or deemed to be
incorporated by reference in such Shelf Registration Statement,
preliminary Prospectus or Prospectus, as the case may be; and all
references in this Agreement to amendments or supplements to the
Shelf Registration Statement, any preliminary Prospectus or
Prospectus shall be deemed to mean and include the filing of any
document under the Exchange Act, after the date of such Shelf
Registration Statement, preliminary Prospectus or Prospectus, as the
case may be, which is incorporated or deemed to be incorporated by
reference therein.
2. Shelf Registration Statement.
(a) The Company shall prepare and, not later than 60
days following the Closing Date, shall file with the SEC a Shelf
Registration Statement with respect to resales of the Securities and
the Common Stock issuable upon conversion thereof by the Holders from
time to time in accordance with the methods of distribution elected
by such Holders and set forth in such Shelf Registration Statement
and thereafter shall use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective under the Act
within 150 days after the Closing Date; provided that if any
Securities are issued upon exercise of the over-allotment option
granted to the Initial Purchasers in the Purchase Agreement and the
date on which such Securities are issued occurs after the Closing
Date, the Company will take such steps, prior to the effective date
of the Shelf Registration Statement, to ensure that such Securities
and Common Stock issuable upon conversion thereof are included in the
Shelf Registration Statement on the same terms as the Securities
issued on the Closing Date. The Company shall supplement or amend the
Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company
for the Shelf Registration Statement, if required by the Act, the
Exchange Act or the SEC.
(b) (1) Not less than 30 calendar days prior
to the effectiveness of the Shelf Registration Statement,
the Company shall mail the Notice and Questionnaire to the
Holders of Securities and Common Stock issued upon
conversion thereof. No Holder shall be entitled to be named
as a selling securityholder in the Shelf Registration
Statement, and no Holder shall be entitled to use the
Prospectus forming a part thereof for resales of Securities
or Common Stock issued upon conversion thereof at any time,
unless such Holder has returned a completed and signed
Notice and Questionnaire to the Company by the deadline for
responses set forth therein; provided, however, that Holders
of Securities or Common Stock issued upon conversion thereof
shall have at least 20 calendar days from the date on which
the Notice and Questionnaire is first mailed to such Holders
to return a completed and signed Notice and Questionnaire to
the Company.
(2) After the Shelf Registration Statement has
become effective, the Company shall, upon the request of any
Holder of Securities or Common Stock issued or issuable upon
conversion thereof that has not returned a completed Notice
and Questionnaire, promptly send a Notice and Questionnaire
to such Holder. The Company shall not be required to take
any action to name such Holder as a selling securityholder
in the Shelf Registration Statement or to enable such Holder
to use the Prospectus forming a part thereof for resales of
Securities or Common Stock issued or issuable upon
conversion thereof until such Holder has returned a
completed and signed Notice and Questionnaire to the
Company, whereupon the Company will be required to take such
action.
(c) The Company shall keep the Shelf Registration
Statement continuously effective under the Act in order to permit the
Prospectus forming part thereof to be usable by all Holders until the
earliest of (i) the second anniversary of the Closing Date or, if
later, the second anniversary of the last date on which any
Securities are issued upon exercise of the Initial Purchasers'
over-allotment option, (ii) the date on which all the Securities and
Common Stock issued or issuable upon conversion thereof may be sold
by non-affiliates ("affiliates" for such purpose having the meaning
set forth in Rule 144) of the Company pursuant to paragraph (k) of
Rule 144 (or any successor provision) promulgated by the SEC under
the Act, (iii) the date as of which all the Securities and Common
Stock issued or issuable upon conversion thereof have been
transferred pursuant to Rule 144 under the Securities Act (or any
similar provision then in force) and (iv) such date as of which all
the Securities and the Common Stock issued or issuable upon
conversion thereof have been sold pursuant to the Shelf Registration
Statement (in any such case, such period being called the "Shelf
Registration Period"). The Company will, subject to Section 2(d),
prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to
keep the Shelf Registration Statement continuously effective for the
Shelf Registration Period; subject to Section 2(d), cause the related
Prospectus to be supplemented by any required supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Act; and, comply in all material
respects with the provisions of the Act with respect to the
disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such Shelf Registration Statement as so amended or such Prospectus as
so supplemented.
(d) The Company may suspend the use of the Prospectus
for a period not to exceed 30 days in any three-month period or for
three periods not to exceed an aggregate of 90 days in any
twelve-month period (the "Suspension Period") for valid business
reasons, to be determined by the Company in its sole reasonable
judgment (not including avoidance of the Company's obligations
hereunder), including, without limitation, the acquisition or
divestiture of assets, public filings with the SEC, pending corporate
developments and similar events; provided that the Company promptly
thereafter complies with the requirements of Section 3(j) hereof, if
applicable; provided, that the existence of a Suspension Period will
not prevent the occurrence of a Registration Default or otherwise
limit the obligation of the Company to pay Liquidated Damages. The
Company shall provide notice to the Holders of a Suspension Period as
required under Section 3(c)(1)(iv) hereof.
(e) If (i) the Shelf Registration Statement is not
filed with the SEC on or prior to 60 days after the Closing Date,
(ii) the Shelf Registration Statement has not been declared effective
by the SEC within 150 days after the Closing Date, or (iii) the Shelf
Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately
by a replacement shelf registration statement filed and declared
effective) or usable (including as a result of a Suspension Period)
for the offer and sale of Transfer Restricted Securities for a period
of time (including any Suspension Period) which shall exceed 60 days
in the aggregate in any twelve-month period during the period
beginning on the Closing Date and ending on the second anniversary of
the Closing Date or, if later, the second anniversary of the last
date on which any Securities are issued upon exercise of the Initial
Purchasers' over-allotment option (each such event referred to in
clauses (i) through (iii), a "Registration Default"), the Company
will pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities who has complied with such Holder's
obligations under this Agreement. The amount of Liquidated Damages
payable during any period in which a Registration Default has
occurred and is continuing is the amount which is equal to
one-quarter of one percent (25 basis points) per annum per $1,000
principal amount of Securities and $2.50 per annum per 6.06061 shares
of Common Stock (subject to adjustment in the event of a stock split,
stock recombination, stock dividend and the like) constituting
Transfer Restricted Securities for the first 90 days during which a
Registration Default has occurred and is continuing and one-half of
one percent (50 basis points) per annum per $1,000 principal amount
of Securities and $5.00 per annum per 6.06061 shares of Common Stock
(subject to adjustment as set forth above) constituting Transfer
Restricted Securities for any additional days during which a
Registration Default has occurred and is continuing; provided that,
the Company hereby agrees that, upon the occurrence of the Stock
Split (which it is currently contemplated will occur on April 2,
1999), the Liquidated Damages payable in respect of Common Stock
shall be automatically adjusted to $2.50 per annum per 12.12121
shares of Common Stock for the first such 90 days during which a
Registration Default has occurred and is continuing and $5.00 per
annum per 12.12121 shares of Common Stock for any additional days
during which such Registration Default has occurred and is continuing
(in each case subject to further adjustment from time to time in the
event of a stock split, stock recombination, stock dividend and the
like), it being understood that all calculations pursuant to this and
the preceding sentence shall be carried out to five decimals.
Following the cure of all Registration Defaults, Liquidated Damages
will cease to accrue with respect to such Registration Default. All
accrued Liquidated Damages shall be paid by wire transfer of
immediately available funds or by federal funds check by the Company
on each Damages Payment Date and Liquidated Damages will be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. In the event that any Liquidated Damages are not paid when
due, then to the extent permitted by law, such overdue Liquidated
Damages, if any, shall bear interest until paid at the Default Rate,
compounded semi-annually. The parties hereto agree that the
Liquidated Damages provided for in this Section 2(e) constitute a
reasonable estimate of the damages that may be incurred by Holders by
reason of a Registration Default.
(f) All of the Company's obligations (including,
without limitation, the obligation to pay Liquidated Damages) set
forth in the preceding paragraph which are outstanding or exist with
respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have
been satisfied in full.
(g) Immediately upon the occurrence or the termination
of a Registration Default, the Company shall give the Trustee, in the
case of notice with respect to the Securities, and the transfer and
paying agent for the Common Stock, in the case of notice with respect
to Common Stock issued or issuable upon conversion thereof, notice of
such commencement or termination, of the obligation to pay Liquidated
Damages with regard to the Securities and Common Stock and the amount
thereof and of the event giving rise to such commencement or
termination (such notice to be contained in an Officers' Certificate
(as such term is defined in the Indenture)), and prior to receipt of
such Officer' Certificate the Trustee and such transfer and paying
agent shall be entitled to assume that no such commencement or
termination has occurred, as the case may be.
(h) All Securities which are redeemed, purchased or
otherwise acquired by the Company or any of its subsidiaries or
affiliates (as defined in Rule 144 (or any successor provision) under
the Act) prior to the Final Maturity Date shall be delivered to the
Trustee for cancellation and the Company may not hold or resell such
Securities or issue any new Securities to replace any such Securities
or any Securities that any Holder has converted pursuant to the
Indenture. All shares of Common Stock issued upon conversion of the
Securities which are repurchased or otherwise acquired by the Company
or any of its subsidiaries or affiliates (as defined in Rule 144 (or
any successor provision) under the Act) at any time while such shares
are "restricted securities" within the meaning of Rule 144 shall not
be resold or otherwise transferred except pursuant to a registration
statement which has been declared effective under the Act.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the
filing thereof with the SEC, a copy of any Shelf Registration
Statement, and each amendment thereof (excluding amendments caused by
the filing by the Company with the SEC of a report required by the
Exchange Act), a copy of any Prospectus, and each amendment or
supplement, if any, to the Prospectus included therein and shall use
its best efforts to reflect in each such document, when so filed with
the SEC, such comments as Salomon Smith Barney Inc. reasonably may
propose. Salomon Smith Barney Inc. shall promptly furnish to the
Company any comments it may have to such documents mentioned in the
foregoing sentence.
(b) The Company shall ensure that (i) any Shelf
Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any amendment or supplement thereto comply
in all material respects with the Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any
Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided that the Company makes no
representation or agreement with respect to information with respect
to you, any Underwriter or any Holder required to be included in any
Shelf Registration or Prospectus pursuant to the Act or the rules and
regulations thereunder and which information is included therein in
reliance upon and in conformity with information furnished to the
Company in writing by you, any Underwriter or any such Holder.
(c) (1) The Company, as promptly as reasonably
practicable, shall advise you and each Holder that has
returned a completed and signed Notice and Questionnaire to
the Company and, if requested by you or any such Holder,
confirm such advice in writing:
(i) when a Shelf Registration
Statement and any amendment thereto has been filed
with the SEC and when the Shelf Registration
Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the SEC for
amendments or supplements to the Shelf Registration
Statement or the Prospectus or for additional
information;
(iii) of the determination by the
Company that a post-effective amendment to the
Shelf Registration Statement would be appropriate;
and
(iv) of the commencement or termination
of any Suspension Period.
(2) The Company shall advise you and each
Holder that has returned a completed and signed Notice and
Questionnaire to the Company and, if requested by you or any
such Holder, confirm such advice in writing:
(i) of the issuance by the SEC of any
stop order suspending the effectiveness of the
Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(ii) of the receipt by the Company of
any notification with respect to the suspension of
the qualification of the Securities included in any
Shelf Registration Statement for sale in any
jurisdiction or the initiation or threat of any
proceeding for such purpose; and
(iii) of the suspension of the use of
the Prospectus pursuant to Section 2(d) hereof or
of the happening of any event that requires the
making of any changes in the Shelf Registration
Statement or the Prospectus so that, as of such
date, the statements therein are not misleading and
the Shelf Registration Statement or the Prospectus,
as the case may be, does not include an untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein (in the
case of the Prospectus, in light of the
circumstances under which they were made) not
misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus
until the requisite changes have been made).
(d) The Company shall use its reasonable best efforts
to obtain the withdrawal of any order suspending the effectiveness of
any Shelf Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the
Securities for offer or sale in any jurisdiction at the earliest
possible time.
(e) The Company shall furnish to each Holder of
Securities and the Common Stock issued upon conversion thereof
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in
writing, all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration
Period, deliver to each Holder of Securities or the Common Stock
issued upon conversion thereof included within the coverage of any
Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto
as such Holder may reasonably request; and, except during the
continuance of any Suspension Period, the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Securities or the Common Stock issued upon conversion thereof covered
by the Prospectus or any amendment or supplement thereto.
(g) Prior to any offering of Securities or the Common
Stock issued upon conversion thereof pursuant to any Shelf
Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Securities and the Common Stock issued
upon conversion thereof included therein and their respective counsel
in connection with the registration or qualification (or exemption
from such registration or qualification) of such Securities or Common
Stock for offer and sale, as the case may be, under the securities or
blue sky laws of such jurisdictions as any such Holders reasonably
request in writing and do any and all other acts or things necessary
or advisable to enable the offer and sale in such jurisdictions of
the Securities and the Common Stock issued upon conversion thereof
covered by such Shelf Registration Statement; provided, however, that
the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified or to
(B) take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then
so subject.
(h) The Company shall cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Securities or the Common Stock issued upon conversion
thereof to be sold pursuant to any Shelf Registration Statement free
of any restrictive legends and in such denominations and registered
in such names as Holders may request prior to sales of Securities or
the Common Stock issued upon conversion thereof pursuant to such
Shelf Registration Statement.
(i) Subject to the exceptions contained in (A) and (B)
of subsection (g) hereof, the Company shall use its best efforts to
cause the Securities and Common Stock issued upon conversion thereof
covered by the applicable Shelf Registration Statement to be
registered with or approved by such other federal, state and local
governmental agencies or authorities, and self-regulatory
organizations in the United States as may be necessary to enable the
Holders to consummate the disposition of such Securities and Common
Stock issued upon conversion thereof as contemplated by the Shelf
Registration Statement; without limitation to the foregoing, the
Company shall make all filings and provide all such information as
may be required by the National Association of Securities Dealers,
Inc. (the "NASD") in connection with the offering under the Shelf
Registration Statement of the Securities and Common Stock issued upon
conversion thereof (including, without limitation, such as may be
required by NASD Rule 2710 or 2720), and shall cooperate with each
Holder in connection with any filings required to be made with the
NASD by such Holder in that regard.
(j) Upon the occurrence of any event contemplated by
paragraph 3(c)(2)(iii) above and subject to Section 3(a) hereof, the
Company shall promptly prepare and file with the SEC a post-effective
amendment to any Shelf Registration Statement or an amendment or
supplement to the related Prospectus or any document incorporated
therein by reference or file a document which is incorporated or
deemed to be incorporated by reference in such Shelf Registration
Statement or Prospectus, as the case may be, so that, as thereafter
delivered to purchasers of the Securities or the Common Stock issued
upon conversion thereof included therein, the Shelf Registration
Statement and the Prospectus, in each case as then amended or
supplemented, will not include an untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein (in the case of the
Prospectus in light of the circumstances under which they were made)
not misleading and in the case of a post-effective amendment, use its
best efforts to cause it to become effective as promptly as
practicable; provided that the Company's obligations under this
paragraph (j) shall be suspended if the Company has suspended the use
of the Prospectus in accordance with Section 2(d) hereof and given
notice of such suspension to Holders, it being understood that the
Company's obligations under this Subsection (j) shall be
automatically reinstated at the end of such Suspension Period.
(k) The Company shall use its reasonable best efforts
to cause The Depository Trust Company ("DTC") on the first Business
Day following the effective date of any Shelf Registration Statement
hereunder or as soon as possible thereafter to remove (i) from any
existing CUSIP number assigned to the Securities any designation
indicating that the Securities are ""restricted securities", which
efforts shall include delivery to DTC of a letter executed by the
Company substantially in the form of Exhibit B hereto and (ii) any
other stop or restriction on DTC's system with respect to the
Securities. In the event the Company is unable to cause DTC to take
actions described in the immediately preceding sentence, the Company
shall take such actions as Salomon Smith Barney Inc. may reasonably
request to provide, as soon as practicable, a CUSIP number for the
Securities registered under such Shelf Registration Statement and to
cause such CUSIP number to be assigned to such Securities (or to the
maximum aggregate principal amount of the Securities to which such
number may be assigned). Upon compliance with the foregoing
requirements of this Section 3(k), the Company shall provide the
Trustee with global certificates for such Securities in a form
eligible for deposit with DTC.
(l) The Company shall use its best efforts to comply
with all applicable rules and regulations of the SEC and shall make
generally available to its security holders as soon as practicable
but in any event not later than 15 months after (i) the effective
date of the applicable Shelf Registration Statement, (ii) the
effective date of each post-effective amendment to any Shelf
Registration Statement, and (iii) the date of each filing by the
Company with the SEC of an Annual Report on Form 10-K that is
incorporated by reference or deemed to be incorporated by reference
in the Shelf Registration Statement, an earnings statement satisfying
the provisions of Section II(a) of the Act and Rule 158 promulgated
by the SEC thereunder.
(m) The Company shall use its best efforts to cause the
Indenture to be qualified under the TIA (as defined in the Indenture)
in a timely manner.
(n) The Company shall cause all Common Stock issued or
issuable upon conversion of the Securities to be listed on each
securities exchange or quotation system on which the Common Stock is
then listed no later than the date the applicable Shelf Registration
Statement is declared effective and, in connection therewith, to make
such filings as may be required under the Exchange Act and to have
such filings declared effective as and when required thereunder.
(o) The Company may require each Holder of Securities
or the Common Stock issued upon conversion thereof to be sold
pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such Securities or Common Stock sought by the Notice and
Questionnaire and such additional information as may, from time to
time, be required by the Act and the rules and regulations
promulgated thereunder, and the obligations of the Company to any
Holder hereunder shall be expressly conditioned on the compliance of
such Holder with such request.
(p) The Company shall, if reasonably requested, use its
best efforts to promptly incorporate in a Prospectus supplement or
post-effective amendment to a Shelf Registration Statement (i) such
information as the Majority Holders provide or, if the Securities or
Common Stock are being sold in an Underwritten Offering, as the
Managing Underwriters or the Majority Underwriting Holders reasonably
agree should be included therein and provide to the Company in
writing for inclusion in the Shelf Registration Statement or
Prospectus, and (ii) such information as a Holder may provide from
time to time to the Company in writing for inclusion in a Prospectus
or any Shelf Registration Statement concerning such Holder and the
distribution of such Holder's Securities and Common Stock and, in
either case, shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after
being notified in writing of the matters to be incorporated in such
Prospectus supplement or post-effective amendment, provided that the
Company shall not be required to take any action under this Section
3(p) that is not, in the reasonable opinion of counsel for the
Company, in compliance with applicable law.
(q) The Company shall enter into such customary
agreements (including underwriting agreements) and take all other
appropriate actions as may be reasonably requested in order to
expedite or facilitate the registration or the disposition of the
Securities or the Common Stock issued or issuable upon conversion
thereof, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification and
contribution provisions and procedures no less favorable than those
set forth in Section 5 (or such other reasonable and customary
provisions and procedures acceptable to the Majority Underwriting
Holders and the Managing Underwriters, if any, with respect to all
parties to be indemnified pursuant to Section 5). The plan of
distribution in the Shelf Registration Statement and the Prospectus
included therein shall permit resales of the Securities or Common
Stock issuable upon conversion thereof to be made by selling security
holders through underwriters, brokers and dealers, and shall also
include such other information as Salomon Smith Barney Inc. may
reasonably request.
(r) The Company shall (i) make reasonably available for
inspection by the Holders of Securities and the Common Stock issued
upon conversion thereof registered or to be registered under a Shelf
Registration Statement, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any
attorney, accountant or other agent retained by the Holders or any
such Underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its
subsidiaries as is customary for due diligence examinations in
connection with public offerings; (ii) cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by the Holders or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration
Statement as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing
by the Company, in its sole discretion, as confidential at the time
of delivery of such information shall be kept confidential by the
Holders or any such Underwriter, attorney, accountant or agent,
unless disclosure thereof is made in connection with a court,
administrative or regulatory proceeding or required by law, or such
information has become available to the public generally through the
Company or through a third party without an accompanying obligation
of confidentiality; provided, further, that if the foregoing
inspection and information gathering specified in subsections (i) and
(ii) would, in the Company's reasonable judgment, disrupt the
Company's conduct of business, such inspections and information
gathering shall be coordinated on behalf of the Holders and the other
parties entitled thereto by one counsel designated by or on behalf of
the Majority Holders (or, in the case of an Underwritten Offering,
the Majority Underwriting Holders and the Managing Underwriters);
(iii) make such representations and warranties to the Holders of
Securities and the Common Stock issued upon conversion thereof
registered thereunder and the Underwriters, if any, in form,
substance and scope as are customarily made by issuers to
Underwriters and covering matters including, but not limited to,
those set forth in the Purchase Agreement; (iv) obtain opinions of
counsel to the Company and updates thereof (which counsel and
opinions, in form, scope and substance, shall be reasonably
satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the Underwriters, if any, covering such matters as
are customarily covered in opinions requested in public offerings;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are
required to be, included in the Shelf Registration Statement),
addressed to each selling Holder of Securities and Common Stock
issued upon conversion thereof registered thereunder (provided such
Holder furnishes the accountants with such representations as the
accountants customarily require in similar situations) and the
Underwriters, if any, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
primary underwritten offerings; and (vi) deliver such documents and
certificates as may be reasonably requested by the Majority Holders
or, in the case of an Underwritten Offering, the Majority
Underwriting Holders, and the Managing Underwriters, if any,
including those to evidence compliance with Section 3(j) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company. The foregoing actions set
forth in clauses (iii), (iv), (v) and (vi) of this Section 3(r) shall
be performed at (A) the effectiveness of such Shelf Registration
Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the
extent required thereunder.
(s) Each Holder agrees that, upon receipt of notice of
the happening of an event described in Sections 3(c)(1)(ii) through
and including 3(c)(1)(iv) and Sections 3(c)(2)(i) through and
including 3(c)(2)(iii), each Holder shall forthwith discontinue (and
shall cause its agents and representatives to discontinue)
disposition of the Securities and the Common Stock issuable upon
conversion thereof and will not resume disposition of such Securities
or the Common Stock until such Holder has received copies of an
amended or supplemented Prospectus contemplated by Section 3(j)
hereof, or until such Holder is advised in writing by the Company
that the use of the Prospectus may be resumed or that the relevant
Suspension Period has been terminated, as the case may be, provided
that, the foregoing shall not prevent the sale, transfer or other
disposition of Securities or Common Stock issuable upon conversion
thereof by a Holder in a transaction which is exempt from, or not
subject to, the registration requirements of the Act, so long as such
Holder does not and is not required to deliver the applicable
Prospectus or Shelf Registration Statement in connection with such
sale, transfer or other disposition, as the case may be; and
provided, further, that the provisions of this paragraph (s) shall not
prevent the occurrence of a Registration Default or otherwise limit
the obligation of the Company to pay Liquidated Damages.
(t) Anything herein to contrary notwithstanding, the
Company will not be required to pay the costs and expenses of, or to
participate in the marketing or "road show" presentations of, more
than one Underwritten Offering initiated at the request of the
Holders of Securities or shares of Common Stock issued or issuable
upon conversion thereof, or to effect more than one Underwritten
Offering at the request of such Holders. The Company will not be
required to pay the costs and expenses of, or to participate in the
marketing or "road show" presentations of, an Underwritten Offering
unless Holders of at least the Minimum Amount (as defined below) of
Securities and/or Common Stock issued or issuable on conversion
thereof have requested that such Securities and/or shares of Common
Stock be included in such an Underwritten Offering. For purposes of
this Agreement, the "Minimum Amount" means 25% of the aggregate
principal amount of Securities originally issued under the Indenture;
provided that, for purposes of computing the Minimum Amount, Holders
of Common Stock issued upon conversion of Securities shall be deemed
to be holders of the aggregate principal amount of Securities which
were converted into those shares of Common Stock. Only Holders of
Securities or shares of Common Stock issued or issuable upon
conversion thereof which are Transfer Restricted Securities shall be
entitled to include such Securities or shares of Common Stock in an
Underwritten Offering and only Transfer Restricted Securities shall
be included in the computation of the Minimum Amount. The
Underwritten Offering initiated by Holders as aforesaid shall include
both Securities and Common Stock if so requested by the Holders. Upon
receipt by the Company, from Holders of at least the Minimum Amount
of Securities and/or Common Stock issued or issuable upon conversion
thereof, of a request for an Underwritten Offering, the Company will,
within 10 days thereafter, mail notice to all Holders of Securities
and shares of Common Stock issued upon conversion/hereof stating
that: (i) the Company has received a request from the Holders of the
requisite amount of Securities and/or Common Stock issued or issuable
on conversion thereof to effect an Underwritten Offering on behalf of
such Holders; (ii) under the terms of this Agreement, all Holders of
Securities and shares of Common Stock issued or issuable upon
conversion thereof which are Transfer Restricted Securities may
include their Securities and shares of Common Stock in such
Underwritten Offering, subject to the terms and conditions set forth
in this Agreement and subject to the right of the Managing
Underwriters to reduce, in light of market conditions and other
similar factors, the aggregate principal amount of Securities and
number of shares of Common Stock included in such Underwritten
Offering; (iii) all Holders electing to include Securities or shares
of Common Stock in such Underwritten Offering must notify the Company
in writing of such election (the "Election"), and setting forth an
address and facsimile number to which such written elections may be
sent and the deadline (which shall be 12:00 midnight on the 30th
calendar day after such notice is mailed to Holders or, if not a
Business Day, the next succeeding Business Day (the "Deadline")) by
which such elections must be received by the Company; and (iv)
setting forth such other instructions as shall be necessary to enable
Holders to include their Securities and shares of Common Stock in
such Underwritten Offering. No Holder shall be entitled to
participate in an Underwritten Offering unless such Holder notifies
the Company of such Election by the Deadline. Notwithstanding
anything to the contrary contained herein, if the Managing
Underwriters for an Underwritten Offering to be effected pursuant to
this Section 3(t) advise the Holders of the Securities and shares of
the Common Stock to be included in such Underwritten Offering that,
because of aggregate principal amount of Securities and/or number of
shares of Common Stock that such Holders have requested be included
in the Underwritten Offering, the success of the offering would
likely be materially adversely affected by the inclusion of all of
the Securities and shares of Common Stock requested to be included,
then the principal amount of Securities and the number of shares of
Common Stock to be offered for the accounts of Holders shall be
reduced pro rata, according to the aggregate principal amount of
Securities and number of shares of Common Stock, respectively,
requested for inclusion by each such Holder, to the extent necessary
to reduce the size of the offering to the size recommended by the
Managing Underwriter. Notwithstanding anything to the contrary
contained herein, neither the Company nor any Person, other than a
Holder of Securities or shares of Common Stock issued or issuable
upon conversion thereof and only with respect to its Transfer
Restricted Securities, shall be entitled to include any securities in
the Underwritten Offering.
4. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under
Sections 2 and 3 hereof and shall reimburse the Holders for the
reasonable fees and disbursements of one firm or counsel designated
by the Majority Holders to act as counsel for the Holders in
connection therewith. Notwithstanding the provisions of this Section
4, each Holder shall bear the expense of any broker's commission,
agency fee or Underwriter's discount or commission.
5. Indemnification and Contribution.
(a) (i) The Company agrees to
indemnify and hold harmless each Holder of
Securities and each Holder of Common Stock issued
upon conversion thereof covered by any Shelf
Registration Statement (including the Initial
Purchasers), the directors, officers, employees and
agents of each such Holder and each person who
controls any such Holder within the meaning of
either the Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become
subject under the Act, the Exchange Act or other
Federal or state law or regulation, at common law
or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material
fact contained in the Shelf Registration Statement
as originally filed or in any amendment thereof, or
in any preliminary Prospectus or Prospectus, or in
any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein, in the light of the
circumstances under which they were made, not
misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or
other expenses reasonably incurred by any of them
in connection with investigating or defending any
such loss, claim, damage, liability or action;
provided, however, that the Company will not be
liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or
is based upon (A) any such untrue statement or
alleged untrue statement or omission or alleged
omission made therein in reliance upon and in
conformity with written information furnished to
the Company by or on behalf of any such Holder or
any Initial Purchaser specifically for inclusion
therein, (B) use of a Shelf Registration Statement
or the related Prospectus during a period when a
stop order has been issued in respect of such Shelf
Registration or any proceedings for that purpose
have been initiated or use of a Prospectus when use
of such Prospectus has been suspended pursuant to
Section 2(d) or Section 3(s); provided, further, in
each case, that Holders received prior notice of
such stop order, initiation of proceedings or
suspension, or (C) if the Holder fails to deliver a
Prospectus, as then amended or supplemented,
provided that the Company shall have delivered to
such Holder such Prospectus, as then amended or
supplemented. This indemnity agreement will be in
addition to any liability which the Company may
otherwise have.
(ii) The Company also agrees to
indemnify and to contribute to Losses, as provided
in Section 5(d), of any Underwriters of Securities
or Common Stock issued upon conversion thereof
registered under a Shelf Registration Statement,
their officers and directors and each person who
controls any such Underwriter within the meaning of
either the Act or the Exchange Act on substantially
the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders
provided in this Section 5(a) and shall, if
requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in
Section 3(q) hereof. This indemnity agreement will
be in addition to any liability which the Company
may otherwise have.
(b) Each Holder of Securities or Common Stock issued
upon conversion thereof covered by a Shelf Registration Statement
(including the Initial Purchasers) severally and not jointly agrees
to indemnify and hold harmless (i) the Company, (ii) each of its
directors, (iii) each of its officers who signs such Shelf
Registration Statement and (iv) each person who controls the Company
within the meaning of either the Act or the Exchange Act to the same
extent as the foregoing indemnity from the Company to each such
Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to
any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 5, notify the
indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial
rights and defenses; and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a)
or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for
which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except
as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses
of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest; (ii)
the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the
institution of such action; or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. Notwithstanding the foregoing, the
Company shall not, in the connection with any one action or
proceeding or separate but substantially similar or related actions
or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate counsel (in addition to
one separate local counsel) at any time for the indemnified parties,
which firm or firms (including any local counsel) shall be designated
by Salomon Smith Barney Inc. An indemnifying party will not, without
the prior written consent of the indemnified party, which consent
will not be unreasonably withheld, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of such indemnified party from all liability
arising out of such claim, action, suit or proceeding. The Company
shall not be liable for any losses, claims, damages or liabilities by
reason of any settlement of any action or proceeding effected without
the Company's prior written consent, which consent will not be
unreasonably withheld.
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 5 is unavailable to or
insufficient to hold harmless an indemnified party for any reason,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall have an obligation to contribute to the
aggregate losses, claims, damages and liabilities (including legal or
other expenses reasonably incurred in connection with investigating
or defending same) (collectively "Losses"), as incurred, to which
such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by such
indemnifying party, on the one hand, and such indemnified party, on
the other hand, from the Initial Placement and the Shelf Registration
Statement which resulted in such Losses; provided, however, that in
no case shall the Initial Purchasers be responsible, in the
aggregate, for any amount in excess of the purchase discount or
commission applicable to the Securities, as set forth on the cover
page of the Offering Memorandum, nor shall any Underwriter be
responsible for any amount in excess of the underwriting discount or
commission applicable to the Securities and Common Stock issued upon
conversion thereof purchased by such Underwriter under the Shelf
Registration Statement which resulted in such Losses. If the
allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as
set forth on the cover page of the Offering Memorandum and (y) the
total amount of Liquidated Damages that the Company was not required
to pay as a result of registering the Securities and Common Stock
issued upon conversion thereof covered by the Shelf Registration
Statement which resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase
discounts and commissions as set forth on the cover page of the
Offering Memorandum, and benefits received by any other Holders shall
be deemed to be equal to the value of receiving Securities or the
Common Stock issuable upon conversion thereof registered under the
Act. Benefits received by any Underwriter shall be deemed to be equal
to the total underwriting discounts and commissions, as set forth on
the cover page of the Prospectus forming a part of the Shelf
Registration Statement (or the applicable Prospectus supplement)
which resulted in such Losses. Relative fault shall be determined by
reference to whether any untrue statement or omission or alleged
untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on
the other hand. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 1 l(f) of the Act)
shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 5,
each person who controls a Holder within the meaning of either the
Act or the Exchange Act and each director, officer, employee and
agent of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Shelf Registration Statement and
each director of the Company shall have the same rights to
contribution as the Company, and each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act
and each officer and director of each Underwriter shall have the same
rights to contribution as such Underwriter, subject in each case to
the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 5 will remain in
full force and effect, regardless of any investigation made by or on
behalf of any Holder, any Underwriter or the Company or any of the
officers, directors or controlling persons referred to in Section 5
hereof, and will survive the sale by a Holder of Securities or shares
of Common Stock covered by a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as
of the date hereof, entered into nor shall it, on or after the date
hereof, enter into, any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders herein or
otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, qualified, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of the Majority Holders;
provided that with respect to any matter that directly or indirectly
affects the rights of the Initial Purchasers hereunder, the Company
shall obtain the written consent of each of the Initial Purchasers
against which such amendment, qualification, supplement, waiver or
consent is to be effective. Notwithstanding the foregoing (except the
foregoing proviso), a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively
to the rights of Holders whose Securities or Common Stock are being
sold pursuant to a Shelf Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be
given by the Majority Holders, determined on the basis of Securities
or Common Stock issued upon conversion thereof being sold rather than
registered under such Shelf Registration Statement.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telecopier, or air courier
guaranteeing overnight delivery:
(1) if to you, initially at the address set
forth in the Purchase Agreement;
(2) if to any other Holder, at the most
current address given by such Holder to the Company in
accordance with the provisions of this Section 6(c), which
address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the
Indenture or, in the case of Common Stock, the address
maintained by the registrar of the Common Stock, with a copy
in like manner to Salomon Smith Barney Inc.; and
(3) if to the Company, initially at its
address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received, if delivered by hand or air courier,
and when sent, if sent by first-class mail or telecopier.
The Initial Purchasers or the Company by notice to the other
may designate additional or different addresses for subsequent
notices or communications.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of
each of the parties, including, without the need for an express
assignment or any consent by the Company thereto, subsequent Holders.
The Company hereby agrees to extend the benefits of this Agreement to
any Holder and Underwriter and any such Holder and Underwriter may
specifically enforce the provisions of this Agreement as if an
original party hereto. In the event that any other person shall
succeed to the Company under the Indenture as provided in Article VII
thereof, then such successor shall enter into an agreement, in form
and substance reasonably satisfactory to the Initial Purchasers,
whereby such successor shall assume all of the Company's obligations
under this Agreement.
(e) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE,
WITHOUT REGARD, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE
CONFLICTS OF LAW RULES THEREOF.
(h) Severability. In the event that any one of more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by
law.
(i) Securities Held by the Company, etc. Whenever the
consent or approval of Holders of a specified percentage of principal
amount of Securities or the Common Stock issuable upon conversion
thereof is required hereunder, Securities or the Common Stock issued
upon conversion thereof held by the Company or its Affiliates (other
than subsequent Holders of Securities or the Common Stock issued upon
conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities)
shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
DOUBLECLICK INC.
_____________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
SALOMON SMITH BARNEY INC.
BT ALEX.BROWN INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
For themselves and the other Initial
Purchases named in Schedule I to the
Purchase Agreement
BY: SALOMON SMITH BARNEY INC.
By:
Name:
Title:
EXHIBIT A
DoubleClick Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
Reference is hereby made to the Registration Agreement (the
"Registration Agreement") between DoubleClick Inc., a Delaware
corporation (the "Company"), and the Initial Purchasers named
therein. Pursuant to the Registration Agreement, the Company has
filed or will file with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(the "Shelf Registration Statement") for the registration and resale
under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), of the Company's 4.75% Convertible Subordinated
Notes due 2006 (the "Securities"), and the shares of the Company's
common stock, par value $.001 per share (the "Common Stock"),
issuable upon conversion thereof. A copy of the Registration
Agreement is attached hereto. All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the
Registration Agreement.
Each holder and beneficial owner of Transfer Restricted
Securities is entitled to have its Transfer Restricted Securities
included in the Shelf Registration Statement. In order to have
Transfer Restricted Securities included in the Shelf Registration
Statement, this Notice of Registration Statement and Selling
Securityholder Questionnaire ("Notice and Questionnaire") must be
completed, executed and delivered to the Company's counsel at the
following address, for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]:
[NAME AND ADDRESS OF COUNSEL]. Holders or beneficial owners of
Transfer Restricted Securities who do not complete, execute and
return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement
and (ii) may not use the Prospectus forming a part thereof for
resales of Transfer Restricted Securities, subject, however, to the
Company's obligations under Section 2(b)(2) of the Registration
Agreement.
Certain legal consequences arise from being named as a
selling securityholder in the Shelf Registration Statement and
related Prospectus. Accordingly, holders and beneficial owners of
Transfer Restricted Securities are advised to consult their own
securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
ELECTION
The undersigned (the "Selling Securityholder") hereby elects
to include in the Shelf Registration Statement the Transfer
Restricted Securities held or beneficially owned by it and listed
below in Item (3)(b). The undersigned, by signing and returning this
Notice and Questionnaire, agrees to be bound with respect to such
Transfer Restricted Securities by the terms and conditions of this
Notice and Questionnaire and the Registration Agreement, including,
without limitation, the indemnification set forth in Section 5 of the
Registration Agreement, as if the undersigned Selling Securityholder
were an original party thereto.
QUESTIONNAIRE
(1) (a) Full legal name of Selling Securityholder:
(b) Full legal name of registered holder (if not the
same as in (a) above) of Transfer Restricted Securities listed in (3)
below (if the Transfer Restricted Securities are held through a
broker-dealer or other third party and, as a result, you do not know
the legal name of the registered holder, please complete Item (l)(c)
below):
(c) Full legal name of broker-dealer or other third
party through which Transfer Restricted Securities listed in (3)
below are held:
(2) Address for notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Beneficial ownership of Transfer Restricted Securities.
Except as set forth below in this Item (3), the undersigned
does not beneficially own any Securities or shares of Common Stock
which constitute Transfer Restricted Securities.
(a) Principal amount of Securities constituting
Transfer Restricted Securities beneficially owned:
Number of shares of Common Stock, if any, constituting
Transfer Restricted Securities (include only shares of Common Stock
which have actually been issued, not shares issuable upon future
conversion of Securities):
The undersigned also may be deemed to beneficially own such
number of shares of Common Stock as may be issued from time to time
upon conversion of the Securities listed in Item (3)(a) above.
(b) Principal amount of Securities and number of shares
of outstanding Common Stock constituting Transfer Restricted
Securities which the undersigned wishes to be included in the Shelf
Registration Statement:
Unless otherwise indicated in the space provided below, all
Securities, all shares of Common Stock listed in response to Item
(3)(a) above, and all shares of Common Stock issuable upon conversion
of the Securities listed in response to Item (3)(b)above, will be
included in the Shelf Registration Statement. If the undersigned does
not wish all such Securities or shares of Common Stock to be so
included, please indicate below the number of such shares to be
included:
(4) Beneficial ownership of other securities of the Company:
Except as set forth below in this item (4), the undersigned
Selling Securityholder is not the beneficial or registered owner of
any shares of Common Stock or any other securities of the Company,
other than Securities and shares of Common Stock listed above in Item
(3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling
Securityholder nor any of its officers, directors or 5% or greater
stockholders has held any position or office or has had any other
material relationship with the Company (or its predecessors or
affiliates)during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling
Securityholder intends to distribute the Transfer Restricted
Securities listed above in Item (3) only as follows (if at all): Such
Transfer Restricted Securities may be sold from time to time by the
undersigned Selling Securityholder (i) to or through underwriters,
brokers or dealers; (ii) directly to one or more other purchasers;
(iii) through agents on a best-efforts basis or otherwise; or (iv)
through a combination of any such methods of sale. Such Transfer
Restricted Securities may be sold from time to time in one or more
transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at varying prices determined at the
time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i) on
any national securities exchange or quotation service on which the
Transfer Restricted Securities may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or services or in the
over-the-counter market, or (iv) through the writing of options. In
connection with sales of the Transfer Restricted Securities or
otherwise, the Selling Securityholder may enter into hedging
transactions with brokers-dealers or others, which may in turn engage
in short sales of the Transfer Restricted Securities in the course of
hedging the positions they assume. The Selling Securityholder may
also sell Transfer Restricted Securities short and deliver Transfer
Restricted Securities to close out such short positions, or loan or
pledge Transfer Restricted Securities to brokers-dealers or others
that in turn may sell such securities. The Selling Securityholder may
pledge or grant a security interest in some or all of the Transfer
Restricted Securities owned by it and, if it defaults in the
performance of its secured obligations, the pledgees or secured
parties may offer and sell the Transfer Restricted Securities from
time to time pursuant to the Prospectus. The Selling Securityholder
also may transfer and donate shares in other circumstances in which
case the transferees, donees, pledgees or other successors in
interest will be the selling stockholders for purposes of the
Prospectus. The Selling Securityholder may sell short the Common
Stock and may deliver the Prospectus in connection with such short
sales and use the shares covered by the Prospectus to cover such
short sales.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges
that it understands its obligation to comply, and agrees that it will
comply, with the provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, particularly
Regulation M and the prospectus delivery requirements under the
Securities Act.
In the event that the Selling Securityholder transfers all
or any portion of the Transfer Restricted Securities listed in Item
(3) above after the date on which such information is provided to the
Company (other than a transaction as a result of which such
securities shall no longer be Transfer Restricted Securities), the
Selling Securityholder agrees to notify the transferees at the time
of the transfer of its rights and obligations under this Notice and
Questionnaire and the Registration Agreement.
By signing below, the Selling Securityholder consents to the
disclosure of the information contained herein in its answers to
Items (1) through (6) above and the inclusion of such information in
the Shelf Registration Statement and related Prospectus. The Selling
Securityholder understands that such information will be relied upon
by the Company in connection with the preparation of the Shelf
Registration Statement and related Prospectus.
The Selling Securityholder agrees to promptly notify the
Company of any inaccuracies or changes in the information provided
herein which may occur subsequent to the date hereof at any time
while the Shelf Registration Statement remains in effect. All notices
hereunder and pursuant to the Registration Agreement shall be made in
writing, by hand-delivery, first class mail, or air courier
guaranteeing overnight delivery as follows:
DoubleClick Inc.
41 Madison Avenue, 32nd Floor
New York, New York 10010
Attention: Chief Financial Officer
Once this Notice and Questionnaire is executed by the
Selling Securityholder and received by the Company, the terms of this
Notice and Questionnaire, and the representations and warranties
contained herein, shall be binding on, shall inure to the benefit of
and shall be enforceable by the respective successors, heirs,
personal representatives, and assigns of the Company and the Selling
Securityholder (with respect to the Transfer Restricted Securities
beneficially owned by such Selling Securityholder and listed in Item
(3)(b) above). This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly
given, has caused this Notice and Questionnaire to be executed and
delivered either in person or by its duly authorized agent.
Dated:
Selling Securityholder
(Print/type full legal name of
beneficial owner of Transfer Restricted
Securities).
By:
Name:
Title:
EXHIBIT B
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re. 4.75% Convertible Subordinated Notes due
2006 (the "Securities") of DoubleClick Inc.
Ladies and Gentlemen:
Please be advised that the Securities and Exchange
Commission has declared effective a Registration Statement
on Form S-3 under the Securities Act of 1933, as amended,
with regard to all of the Securities referenced above.
Accordingly, there is no longer any restriction as to whom
such Securities may be sold and any restrictions on the
CUSIP designation are no longer appropriate and may be
removed. I understand that upon receipt of this letter, DTC
will remove any stop or restriction on its system with
respect to this issue.
As always, please do not hesitate to call if we can
of further assistance.
Very truly yours,
By:
Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001049480
<NAME> DoubleClick Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 331,851
<SECURITIES> 39,295
<RECEIVABLES> 27,382
<ALLOWANCES> (4,297)
<INVENTORY> 0
<CURRENT-ASSETS> 396,430
<PP&E> 19,321
<DEPRECIATION> (5,025)
<TOTAL-ASSETS> 416,651
<CURRENT-LIABILITIES> 24,339
<BONDS> 250,000
0
0
<COMMON> 39
<OTHER-SE> 141,952
<TOTAL-LIABILITY-AND-EQUITY> 416,651
<SALES> 22,087
<TOTAL-REVENUES> 22,087
<CGS> 10,098
<TOTAL-COSTS> 20,577
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,663)
<INCOME-PRETAX> (6,925)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,925)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,925)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
